In a step toward European expansion, Canada-based Hudson’s Bay Co. (HBC) announced today that it has entered into a definitive agreement to acquire Galeria Holding, parent of German mega-department store chain Kaufhof.
Under the terms of the deal, valued at 2.42 billion euros ($2.72 billion at current exchange rates), Hudson’s Bay Co. will now operate Galeria Kaufhof’s 103 locations, 16 Sportsarena stores and 16 Galeria Inno locations across Belgium.
HBC also announced today a joint-venture agreement with Simon Property Group through which Simon and HBC will purchase at least 40 of Kaufhof’s owned or partially owned properties. That real estate transaction, HBC said, will largely finance the Kaufhof acquisition, limiting the amount of debt HBC incurs from the purchase.
“These are exciting transactions that demonstrate our proven growth formula in action: improving solid retail operations, unlocking the value of real estate and growing through acquisitions,” said Richard Baker, HBC’s governor and executive chairman, in a statement. “We have been carefully surveying the European retail landscape for many years for a potential expansion opportunity and have watched Kaufhof build on its exceptional real estate to become the No. 1 department store in Germany.”
HBC — Saks Fifth Avenue and Lord & Taylor’s parent company — will now operate 464 stores, with about 44 percent of sales generated in the U.S., 31 percent in Germany, 23 percent in its home country of Canada and 2 percent in Belgium, the firm said.
“This acquisition is a significant step forward in our plans to become a premier international retailer,” said Jerry Storch, CEO of HBC, in a release. “With Kaufhof, we will operate eight leading banners in Canada, the United States, Germany and Belgium. Expanding our footprint into Europe with Kaufhof also provides us with a strong foundation to explore additional opportunities for growth throughout the Continent.”
Baker called the acquisition “the right investment at the right time.”