HBC has announced that the merger of retail operations of HBC Europe and Signa’s Karstadt Warenhaus GmbH and the formation of the companies’ real estate joint venture is now complete.

Commenting on the development, Richard Baker, HBC's Governor and Executive Chairman, said in a statement: “This transaction generates substantial proceeds for HBC. As we look ahead, we will continue to take strong actions to strengthen our company and deliver value for our shareholders.”

In connection with today's closing, HBC said that it has received proceeds of 171 million euros, which will be used to permanently repay a portion of HBC’s term loan. Further, HBC expects to receive additional proceeds of 250 million euros following the sale of a 50 percent interest in 18 additional properties in Germany expected to close in January. The transactions value HBC’s German real estate assets at a total of 3.25 billion euros compared to the company’s total Galeria Kaufhof purchase price of 2.51 billion euros in 2015.

“Combining HBC Europe with Karstadt creates a stronger, better capitalized retailer well positioned to succeed in the German market. Over the past year, in addition to this transaction, we have sold Gilt, sold the Lord & Taylor flagship to WeWork and rightsized the Lord & Taylor business, and put in place new, experienced leaders in key areas. Looking ahead, the creation of a stronger operator in Europe allows us to focus our attention on our North American business,” added Helena Foulkes, HBC’s CEO.

Through this deal, HBC and Signa Retail have combined HBC Europe’s retail operations and Signa’s Karstadt Warenhaus GmbH to create Germany’s leading retailer, with 243 locations, 32,000 employees, and pro forma annual revenue in excess of 5 billion euros. HBC owns 49.99 percent of the retail joint venture and Signa owns 50.01 percent. In addition, Signa acquired a 50 percent interest in HBC's German real estate assets forming a 50-50 joint venture to own and manage HBC's German real estate assets, including 41 properties owned by HBC’s existing joint venture in Europe.

 

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