Shares of Hudson’s Bay Company (TSX: HBC) soared more than 9% on Wednesday after the Canadian retailer received “an incomplete, non-binding and unsolicited offer” for its German business. Along with Lord & Taylor, Saks Fifth Avenue and Gilt, HBC owns Galeria Kaufhof, a German department store chain.
The takeover bid, worth a reported $3.5 billion, came from SIGNA, an Austrian retail and real estate group founded by René Benko (pictured). SIGNA owns Karstadt, a German retailer that’s one of Galeria Kaufhof’s rivals.
This isn’t the first time SIGNA has made a move to acquire Galeria Kaufhof.
In 2015, HBC outbid the real estate group to buy the German chain in a transaction valued at €2.6 billion.
Debt-laden HBC selling off real estate holdings
Founded in 1670, HBC—known to be the oldest company in North America—is struggling with its long-term debt, which has hovered around $4.8 billion for the last two years. The company has been exploring ways to capitalize on its real estate holdings.
SIGNA’s offer to take over HBC’s German business—along with some European real estate assets—comes just a week after HBC announced the sale of the flagship location of Lord & Taylor. That transaction, which is expected to result in an aggregate of C$1.6 billion (about $1.26 billion) debt reduction, appears to have sent a signal to SIGNA that HBC’s real estate assets are in play.
In addition, a joint venture between HBC and RioCan Real Estate Investment Trust is exploring a possible sale of its Vancouver property in a bid to capitalize on a local real estate market that has appreciated significantly over the past several years.
As ecommerce platforms and changing consumer preferences cut into margins, investors in brick-and-mortar retailers have turned their attention to property portfolios and the value stored therein.
Related read: Here are four ways real estate factors into retail M&A
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