Metro in talks over Galeria Kaufhof sale

Metro, the German retail group, revived hopes of a sale of its Galeria Kaufhof department store chain by naming two groups with which it is in talks over a potential deal.

Metro said Signa Holding, an Austrian property company, had shown interest in Kaufhof, as had Nicolas Berggruen, whose Karstadt department store group is Kaufhof’s closest German rival.

A deal to sell Kaufhof – which is considered by Metro to be worth at least €2bn – would be the biggest restructuring at Metro, the world’s fourth-largest retail group by sales, since Eckhard Cordes took over as chief executive in 2007.

Mr Cordes said last month he would not seek to stay on as chief executive after weeks of damaging speculation over whether his contract, which ends next October, should be renewed.

No detailed negotiations or due diligence have been carried out by any interested party, sources familiar with the Kaufhof talks said, and a sale may not be concluded quickly. Sources familiar with Metro have previously said El Corte Inglés, the Spanish department store group, was also talking to Metro about a possible Kaufhof acquisition, while Mr Cordes has previously indicated interest from private equity investors.

Signa Holding – where George Economou, a Greek shipping magnate, is a minority investor – confirmed it was in talks with Metro. However, Mr Economou’s possible interest in a retail investment in Germany illustrates that many wealthy Greek investors prefer to seek opportunities abroad rather than in their crisis-hit domestic economy, in spite of the relatively under-developed retail sector.

Mr Berggruen – a colourful billionaire who bought Karstadt out of insolvency last year – could not be reached for comment.

Kaufhof, which has 139 stores and accounts for about 5 per cent of Metro’s €67bn in annual sales, has for a long time been slated for sale by Mr Cordes – partly because it is almost entirely focused on the mature German market, in contrast to other parts of Metro which are investing heavily in emerging markets. But the chief executive’s previous confidence that a deal could be struck waned as the financial crisis dragged on.

Mr Cordes had also at one time shown interest in joining Kaufhof with parts of Karstadt, creating a single dominant German department store group.

Metro, whose supervisory board has yet to appoint a successor to Mr Cordes, is due to report its third-quarter results on Thursday. Its supervisory board met on Wednesday for the last time under the leadership of Jürgen Kluge, who also decided to step down after the public dispute over Mr Cordes’ job, and is next likely to discuss the appointment of a new chief executive later this month.

Metro shares rose 2 per cent to €33.75.