Shares in Germany's Metro AG are ending the week on a high note after speculation amounted that it was planning to join rival and Arcandor AG to spearhead a far-reaching shakeout in Europe's retail business, according to dpa. Together with a media report that the two German retailers are considering merging their Kaufhof and Karstadt department store chains, there is also talk about the prospects of Italy's La Rinascente and France's Printemps linking up to forge a new retailing giant. Germany's business daily Handelsblatt reported Friday that new Metro chief Eckhard Cordes and his counterpart at Arcandor Thomas Middelhoff have been holding talks about the possibility of forming Europe's second biggest retailer after Spain's Corte Ingles department store. A fusion between Kaufhof and Karstadt would create a retailing powerhouse with a combined annual revenue of more than eight billion euros (11.6 billion dollars). However, spokesmen for both companies declined to comment on the report with Arcandor saying that markets had speculating about consolidation in Germany's hard-pressed retail sector for sometime. Nevertheless, investors seized on the report of a possible merger to drive up shares in both Metro and Arcandor. Arcandor shares were ending the trading week down about one per cent after chalking a more than two per cent jump during the day, while Metro's stock gained more than four per cent following the publication of the Handelsblatt report. The report about the possible tie up between Kaufhof and Karstadt came just one day after Cordes took over as Metro chief. While Karstadt operates 89 department stores and 28 sport- speciality stores in Germany, 113 department stores and 13 sports shops form Kaufhof's retail business in Germany. A merger between the two retailers could generate annual savings of up to 400 million euros, Handelsblatt reported. The possibility of Rinascente and France linking up comes in the wake of a consortium comprising Pirelli Re and Deutsche Bank property unit expressing an interest in buying into Arcandor's retail property business, which the group is moving to sell off. Deutsche Bank's property unit already has a stake in French department store Printemps while Pirelli RE has a holding in Rinascente.
