BERLIN, Sept. 11 (Xinhua) -- Germany's biggest department stores Karstadt and Kaufhof have reached a final agreement on a corporate merger which will create one of Europe's largest department store chains, German media reported on Tuesday.
The German press agency (dpa) and newspaper Sueddeutsche Zeitung (SZ) both cited information from company insiders that a breakthrough had been achieved in negotiations between the retail giants. The fusion is still subject to approval by the German Federal Cartel Office.
Andreas Mundt, director of the German Federal Cartel Office, told press earlier that he would closely scrutinize the antitrust implications of the agreement between Kaufhof and Karstadt for customers as well as supplier firms.
"We are preparing for an extremely comprehensive and laborious antitrust investigation," Mundt had told media.
Kaufhof and Karstadt own nearly 200 department stores in Germany together and employ around 37,000 combined staff in the country.
Only recently, SZ had reported that the closely-watched merger was on the brink of collapse as a consequence of financial difficulties experienced by Kaufhof's Canadian owner Hudson's Bay Company (HBC).
HBC and Signa Group, the Austrian parent company of Karstadt, have both described the deal as a "fusion of equals". However, Signa is set to acquire just over half of the shares (50.01 percent) of the new joint venture and will also become responsible for the operative end of business.
Following its acquisition by Signa in 2015, Karstadt has implemented a corporate restructuring program under chief executive officer (CEO) Stephan Fanderl which has returned the ailing retailer to profitability. By contrast, Kaufhof has so far failed to reverse a trend of declining revenue and losses since it became part of the HBC portfolio three years ago.
Both department chains have expressed hope that the fusion will allow them to demand better conditions from suppliers. Additionally, industry experts have pointed to large potential savings which the merged company can achieve in administration and logistics.
Karstadt and Kaufhof have stated during prior negotiations that they intend to retain most current staff and will only close a small number of existing stores. The "Europaeische Warenhaus AG" established as a result of a successful fusion would become Europe's second largest department store chain after Spanish company El Corte Ingles.
Speaking to Xinhua on Tuesday, the Federal Cartel Office said that it had yet to receive documentation from Karstadt and Kaufhof outlining the merger agreement cited by press.
The Bonn-based agency said that it was unable to provide an estimate about the duration of the antitrust probe until a formal registration of the retail merger plans was filed by the companies.