But apparently, HBC is reluctant to deal with Benko. “There are still a lot of question marks,” said one source close to the situation, commenting on Signa’s ability to finance a satisfactory deal.
Similarly, another source familiar with the German retail market, sounded skeptical of Benko’s offer, saying, “Show me the money.”
Last week, Hudson’s Bay Co. acknowledged receipt of Signa’s offer for Kaufhof and related real estate holdings, but dismissed the offer as “incomplete, non-binding and unsolicited and showing no evidence of financing.”
Benko said HBC’s comments regarding the credibility of its offer was “particularly puzzling as our offer is based on an in-depth analysis of public information and our great familiarity with the Kaufhof assets.”
On Tuesday, HBC had no comment to Benko’s letter and referred a media inquiry to HBC’s response of last week, which aside from characterizing Signa’s offer as incomplete, said that “consistent with its fiduciary responsibility, the HBC board intends to review the offer in due course, and cautions that the offer is subject to many assumptions, conditions and contingencies.”
Signa is offering approximately 3 billion euros for the Kaufhof retail chain and its real estate holdings, and says Kaufhof has an enterprise value of 375 million euros. Kaufhof has 97 stores in Germany and 16 in Belgium under the Galeria Inno name.
Kaufhof and Signa-owned Karstadt are Germany’s two leading department store chains. They compete head-to-head, and have been in and out of merger talks for years.
Signa is considered Austria’s largest privately owned real estate company.
HBC isn’t likely to be anxious to quickly sell Kaufhof considering it’s only been two years since the company bought Kaufhof, related real estate holdings and Galeria Inno in Belgium for $2.7 billion from Metro AG. HBC beat out Benko’s attempts to buy Kaufhof and the deal lifted HBC’s volume by 25 percent and recast the company as an international retailer. It also put a halt to merger talks between Kaufhof and Karstadt that had been happening periodically for years.
HBC is currently upgrading and renovating certain Kaufhof locations, including opening Sephora shops inside Kaufhof stores. HBC’s stake in Germany is growing further with the addition of Saks Off 5th locations, though Kaufhof has been performing under HBC’s expectations.