- Potential Breuninger Sale: What True Level of Interest Exists?
Breuninger Department Store Chain Reportedly Up for Sale, Potential Buyers Circling
As per a report by "Wirtschaftswoche", Breuninger department store chain is considering selling its business. The move has left many industry insiders surprised as the company, established in Stuttgart in 1881, has traditionally catered to an affluent clientele and has been a model for other department stores. Its "boutique within a boutique" concept in its flagship store and the twelve other branches, along with its successful online trade, have contributed to its success.
Sources close to the negotiations suggest that the entire Breuninger Group could be sold for an enterprise value of 2.5 billion euros. After deducting the debt, the purchase price could amount to around 2 billion euros, with around 1.8 billion euros potentially attributed to the real estate. Initial offers are expected by the end of October. According to a list by investment bank Macquarie, 31 companies, including both financial investors and retail companies, have expressed interest in Breuninger.
Breuninger itself has neither confirmed nor denied the planned sale, saying, "We cannot provide any information on the questions you have asked, as Breuninger generally does not comment on market rumors."
In 2023, the company reported sales of around 1.5 billion euros, an increase of seven percent over 2019. Breuninger claims that half of its sales come from its online trade. Therefore, poor business performance seems unlikely to be the reason for the sale plans.
KaDeWe Buyer Central Group in Talks
The possible sale of Breuninger and how far and serious potential buyers are interested is unclear. According to "Wiwo", renowned takeover candidates have already made overtures: El Corte Ingles from Spain, Galeries Lafayette from France, and Richard Baker and the Central Group from Thailand, which recently acquired the KaDeWe Group. The latter, according to fashion industry expert Jürgen Müller on the portal profashionals.de, would offer significant synergy benefits: the KaDeWe stores and Breuninger would become the luxury market leader, the online know-how would benefit both, and the Central Group would have a strong negotiating position in purchasing with its other portfolio - Selfridges, Globus, De Bijenkorf, and La Rinascente - vis-à-vis luxury brands, which increasingly prefer their own stores and online shops to the classic wholesale trade.
Today, the Central Group has 42 stores in eight countries, making it the largest luxury retailer in Europe for the Chirathivat billionaire family. The family also owns hotels in Japan and Austria. Nevertheless, Thailand remains the main location of the group. Here, it is the market leader in shopping centers, continues to operate classic department stores, hotels, and restaurants, and also builds residential complexes and is, according to its own statements, the leading developer and operator of office buildings.
Well-known in Europe, the Central Group has primarily gained attention through its collaboration with the defunct Signa Group of René Benko. Following Signa's series of bankruptcies, the Central Group recently acquired René Benko's shares in the KaDeWe group. Since this summer, the iconic KaDeWe property in Berlin also belongs to the Central Group. Upon request from Capital, the Central Group declined to comment: "We will not comment on speculation," the company stated.
A split of Breuninger and a separate sale of its properties and retail business is also possible. However, such strategies have proven to be a significant burden, as seen in the Karstadt-Kaufhof saga.
Properties to be Sold Separately, But to Whom?
According to "Wirtschaftswoche," the retail business and properties will definitely be sold separately. It remains unclear whether all of Breuninger's locations are owned by the family. The report mentions the three Frankfurt-based fund companies Deka, DWS, and Union Investment, all providers of open real estate funds, as well as the US bank Morgan Stanley and the private equity firm Apollo, as potential buyers.
None of the companies mentioned – DWS, Deka, Union Investment, or Morgan Stanley – responded to Capital's request for comment, and Apollo initially left the request unanswered. However, it was said off the record that a few "usual suspects" had been named to initiate the sales process. One of the potential buyers mentioned in the report stated that they were definitely not interested in Breuninger's properties. Another expressed surprise, saying, "This is the first I've heard of it," when asked by Capital.
The 14th Breuninger store in the Westfield Quartier in Hamburg's Hafencity is set to open on October 17. By then, more information may be available, which would be important for many employees. While the Verdi union sees no immediate threat to the 6,500 jobs, some employees are still concerned. "I'm not too worried about job security. Breuninger is in a much better position than other textile retailers," said Wolfgang Krüger, who heads the trade department at Verdi in Baden-Württemberg. However, some employees are indeed anxious.
The potential sale of Breuninger could lead to significant changes in the fashion industry, as potential buyers like El Corte Ingles, Galeries Lafayette, and the Central Group, known for their luxury retail portfolio, express interest. The Central Group, with its strong presence in Europe and expertise in online trade, could offer significant synergy benefits with Breuninger.
In the process of potentially separating the retail business and properties, various real estate firms like Deka, DWS, Union Investment, Morgan Stanley, and private equity firms are mentioned as potential buyers, although their responses are not clearly stated.
