UPDATE 1-Hudson's Bay in lead to buy Metro's Kaufhof - sources

Thu Jun 11, 2015 10:37am EDT
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DUESSELDORF, Germany, June 11 (Reuters) - Canadian retailer Hudson's Bay Co is in the lead in a bidding battle for Metro AG's department store chain Kaufhof, with a decision possible next week, according to sources familiar with the matter.

Metro, which has long been keen to sell Kaufhof to focus on its core cash-and-carry and consumer electronics businesses, declined to comment.

The company said last month it was in talks about selling Kaufhof and repeated that the conditions for a sale were an appropriate price, a convincing concept for the future of the chain and solid financing.

Sources had previously told Reuters that Hudson's Bay had made a non-binding offer for Kaufhof with a value similar to a separate bid by Austrian investor Rene Benko, who offered 2.9 billion euros ($3.3 billion).

The sources said negotiations with Benko and Hudson's Bay were in the final phase and a decision was likely next week.

Hudson's Bay, which also operates U.S. luxury chains Saks Fifth Avenue and Lord & Taylor, intends to invest heavily in the Kaufhof chain, extending its online business and better integrating it with its stores, a source said last week.

It does not plan to close any of Kaufhof's 120 stores in Germany and 16 in Belgium and could use the deal as the foundation to expand further into Europe, with further purchases possible, the person added.

Benko already owns struggling German department store chain Karstadt and is expected to merge the two businesses if his bid is accepted, potentially resulting in store closures and job losses.

Earlier this week, Thailand's largest retail conglomerate Central Group said it would buy a majority stake in three luxury department stores in Germany from Benko's property firm Signa Group for an undisclosed sum as part of its expansion in Europe.

($1 = 0.8920 euros) (Reporting by Matthias Inverardi; Writing by Emma Thomasson; Editing by David Holmes)