May 20, 2009
Arcandor calls for crisis talks with rival Metro
May 20, 2009
FRANKFURT, May 19 (Reuters) - German retailer Arcandor has called for a high-level meeting with rival Metro and investment bank Goldman Sachs to hammer out a plan for its stricken Karstadt department store chain.
Metro in Paris - Photo : AFP
Market leader Metro, concerned by the prospect of state aid to a major competitor in Germany, has instead proposed merging its Kaufhof department store chain with Arcandor's Karstadt.
Arcandor chief executive Karl-Gerhard Eick initially opposed the merger idea, floated by Metro CEO Eckhard Cordes, but on Tuesday he told German mass daily Bild: 'I want to clarify whether we can find a solution for Kaufhof and Karstadt together.'
A spokesman for Metro, the world's fourth-largest retailer, said the company welcomed talks with Eick but that the time and place still needed to be negotiated.
Eick also told Bild he had invited the head of Goldman Sachs in Germany, Alexander Dibelius, to attend the meeting, planned for Thursday. Goldman owns, together with other investors, the Karstadt department stores' real estate.
A spokeswoman for Goldman Sachs said the investment bank had not yet received an invitation for a meeting on Thursday.
SHOPPING FOR SUPPORT
Metro's plan would see Metro and the owners of the Karstadt stores' real estate each holding just under 50 percent in a new 'German Department Store Inc', curtailing Arcandor's influence.
Metro has already presented its plan to local government officials and was set to discuss it with German Economy Minister Karl-Theodor zu Guttenberg later on Tuesday, sources said.
Eick has criticised the plan and said he would favour a model that would give Arcandor greater say in a combined unit.
Metro's proposal could mark the beginning of Arcandor's break-up, as it would effectively leave it with just its stake in travel group Thomas Cook and mail-order division Primondo.
Arcandor needs to refinance credit lines worth up to 710 million euros by June 12, and Eick has warned the group could face insolvency if it failed to do so.
It plans to ask the German government for 650 million euros ($880.9 million) in state loan guarantees as well as a loan from the state development bank KfW later this week.
Arcandor shares were unchanged at 2.27 euros by 1521 GMT, while Metro shares were a touch higher at 34.99 euros in a broadly higher German market.
(Reporting by Eva Kuehnen and Matthias Inverardi in Duesseldorf, editing by Will Waterman)
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