Arcandor AG and Metro AG of Germany are going for merger

On June 7, 2009, Metro AG, a renowned retail chain in Germany, reported to have started discussion with Arcandor AG, a reputed retail and tourism company. The two companies are going to merge their departmental stores business to survive the economic recession.

Arcandor AG and Metro AG are owners of the two largest department store chains in Germany. Metro AG owns the Kaufhof chain while Arcandor AG is the owner of Karstadt department stores, most of which are situated in buildings of a real estate company, owned by Goldman Sachs. Chairmen of the three companies- Karl Gerhard Eick of Arcandor AG, Eckhard Cordes of Metro AG and Alexander Dibelius of Goldman Sachs in Germany have agreed to start necessary negotiations in the coming week.

Arcandor, which is on the verge or bankruptcy, asked for $610 million “in government credit guarantees.” However, many politicians are against this guarantee as they believe that the company’s failure is actually “management failure.” Business Week reports:

Chancellor Angela Merkel has said that Arcandor must seek a private solution to chronic problems that include too broad a portfolio and falling consumer demand.

"We naturally want to make every possible effort to secure an economic solution," Merkel said Sunday in Berlin.

On the other hand, Gerd Koslowski, spokesman, Arcandor said that his company could fulfill the government’s credit requirements after the alliance between the companies department stores business is formed.