Press Release<< Back
HBC Enters Agreement to Merge HBC Europe with Germany's Karstadt
- Combines two iconic banners to create Germany's leading retailer with annual revenue in excess of €5 billion
- HBC to own 49.99% of stronger, well-capitalized operator positioned for improved profitability
- Formation of 50-50 real estate joint venture values German real estate assets at €3.25 billion
Net proceeds to HBC of
CAD$616 million, generated by partial sale of German real estate assets, to be used for debt repayment
Net proceeds from transactions and implied value of HBC's remaining
interest in German real estate assets worth
"We are excited to bring together these iconic banners to create
Germany's leading retail business," said
HBC Europe's retail operations will merge with SIGNA's
Foulkes added, "We are taking strong action to strengthen our retail
portfolio and enhance HBC's profitability. This transaction creates
significant value for our shareholders, enhances our balance sheet and
provides a better operating platform for our European business. The
creation of a stronger operator in
SIGNA will acquire a 50% interest in HBC's German real estate assets
from HBC and its partners, and a 50-50 joint venture will be formed to
own and manage HBC's German real estate assets. These transactions will
generate net proceeds to HBC of €411 million (
The combination of the retail companies and the formation of the real estate joint venture are expected to occur within the next 90 days and are subject to approval from European competition authorities and satisfaction or waiver of customary closing conditions. Follow on real estate transactions, and receipt of proceeds therefrom, are expected to occur through early 2019. HBC directs investors to its public filings available at www.sedar.com and at www.hbc.com for additional information and details of the transactions.
HBC Financial Community Conference Call to Discuss Transaction
HBC's management team will discuss the transaction during a conference
call for the financial community today, September 11, 2018, at
Presentation slides for the conference call will be made available on the Company's website located at www.hbc.com.
HBC is a diversified global retailer focused on driving the performance
of high quality stores and their omnichannel platforms and unlocking the
value of real estate holdings. Founded in 1670, HBC is the oldest
HBC has significant investments in real estate joint ventures. It has
partnered with Simon Property Group Inc. in the
Certain statements made in this news release are forward-looking statements within the meaning of applicable securities laws, including, but not limited to, statements with respect to: the strategic partnership with SIGNA, including the combination of HBC Europe's retail operations with SIGNA's retail operations, the proposed real estate joint venture, the transfer of a 50% interest in HBC's German real estate assets from HBC and its partners; the expectation that the transactions will further strengthen HBC's European retail and real estate operations, unlock real estate value, create value for shareholders, improve balance sheet and improve performance; the expectation that net proceeds from the proposed transactions will provide additional liquidity and repay debt; the anticipated performance of the combined retail operating company; the anticipated completion of the proposed transactions; and other statements that are not material facts. Often but not always, forward-looking statements can be identified by the use of forward-looking terminology such as "may", "will", "expect", "believe", "estimate", "plan", "could", "should", "would", "outlook", "forecast", "anticipate", "foresee", "continue" or the negative of these terms or variations of them or similar terminology.
Although HBC believes that the forward-looking statements in this news release are based on information and assumptions that are current, reasonable and complete, these statements are by their nature subject to a number of factors that could cause actual results to differ materially from management's expectations and plans as set forth in such forward-looking statements, including, without limitation, the following factors, many of which are beyond HBC's control and the effects of which can be difficult to predict: (a) the failure to obtain or satisfy, in a timely manner or otherwise, required regulatory approvals and other conditions of closing necessary to complete the proposed transactions; (b) the failure to obtain or satisfy, in a timely manner or otherwise, conditions of closing necessary to complete the sale of the proposed transactions on the contemplated timelines; (c) the possibility that the anticipated benefits from the strategic partnership cannot be realized in a timely manner or otherwise; (d) the ability of combined retail operating company to retain and attract key Kaufhof or Karstadt personnel and for Kaufhof or Karstadt to maintain relationships with customers, suppliers and other business partners; (e) credit, market, currency, operational, real estate, liquidity and funding risks generally, including changes in economic conditions, interest rates or tax rates; (f) risks and uncertainties relating to information management, technology, supply chain, product safety, changes in law, competition, seasonality, commodity price and business and (g) other risks inherent to the Company's business and/or factors beyond its control which could have a material adverse effect on the Company.
HBC cautions that the foregoing list of important factors and
assumptions is not exhaustive and other factors could also adversely
affect its results. For more information on the risks, uncertainties and
assumptions that could cause HBC's actual results to differ from current
expectations, please refer to the "Risk Factors" section of HBC's Annual
Information Form dated
The forward-looking statements contained in this news release describe HBC's expectations at the date of this news release and, accordingly, are subject to change after such date. Except as may be required by applicable Canadian securities laws, HBC does not undertake any obligation to update or revise any forward-looking statements contained in this news release, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements.
Unless otherwise indicated, figures in this news release assume EUR:CAD = 1:1.5.
2. Based on 235.6 million common shares of HBC outstanding, assuming conversion of the HBC's preferred shares.
News Provided by Acquire Media