BERLIN, Aug. 27 (Xinhua) -- The Federal Cartel Office in Germany has launched an investigation into the planned fusion of ailing retail giants Kaufhof and Karstadt, the Bonn-based government agency announced on Monday.
Andreas Mundt, director of the Federal Cartel Office, told press that his staff would consider the position of the two department store chains in German regional markets, as well as its digital competition from e-commerce providers.
The news comes shortly after the newspaper "Sueddeutsche Zeitung" (SZ) reported that the merger could collapse surprisingly due to financial difficulties experienced by Kaufhaus' Canadian mother corporation Hudson's Bay Company (HBC).
According to SZ, HBC has received an ultimatum from a consortium of banks led by the Landesbank Baden-Wuerttemberg (LBBW) to ensure its compliance with conditions for the earlier award of a 1.3-billion-euro loan by the end of the September. The funds in question were used to purchase the buildings which house the stores of Kaufhaus across Germany.
If HBC fails to meet the deadline set by the banks, it faces the prospect of either having to repay the loan in its entirety or experiencing the repossession of its real estate portfolio as collateral.
The development has thrown an unexpected spanner into negotiations over the merger between HBC and the Austrian Karstadt owner Signa which were already well-advanced in July.
Kaufhof and Karstadt own nearly 200 department stores in Germany and employ around 37,000 combined staff in the country. Until recently, the deal was expected to be finalized shortly with Signa acquiring just over half of the shares of the new company and taking responsibility for the operative business.
