The merged entity now operates in 43 locations with 32,000 employees. Credit: Christian Alexander Tietgen.

Hudson’s Bay Company (HBC) has closed the proposed merger of its European retail operations with Signa Retail’s Karstadt Warenhaus, a German department store chain.

HBC will use the €171m  proceeds from the deal which was announced in September this year, to permanently repay a portion of its term loan.

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The merger created a leading retailer in the country with 43 locations, 32,000 employees, and pro forma annual revenue of more than €5bn.

Under the terms of the agreement, HBC now owns 49.99% of the retail joint venture (JV) and Signa owns 50.01%.

HBC CEO Helena Foulkes said: “Combining HBC Europe with Karstadt creates a stronger, better capitalised retailer well positioned to succeed in the German market.

“This transaction creates significant value for our shareholders and continues the bold actions we are taking to strengthen our business.”

“This transaction creates significant value for our shareholders and continues the bold actions we are taking to strengthen our business.

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“Over the past year, in addition to this transaction, we have sold Gilt, sold the Lord & Taylor flagship to WeWork and rightsized the Lord & Taylor business, and put in place new, experienced leaders in key areas.”

In addition, HBC and Signa completed the formation of a 50-50 real estate JV between both the parties. The deal allows Signa to own a 50% interest in HBC’s German real estate assets from HBC and its partners.

The new JV will focus on managing 41 real estate properties owned by HBC’s existing JV in Europe.

Foulkes added: “Looking ahead, the creation of a stronger operator in Europe allows us to focus our attention on our North American business, ensuring we are making the right strategic decisions to continue to drive profitability and performance and best capitalise on our exceptional real estate assets.”

Furthermore, HBS expects to receive €250m after closing the sale of a 50% interest in 18 additional properties in Germany.

The transaction, which is expected to close in January next year, values the company’s real estate assets in Germany at a total of €3.25bn.