Kaiser's Tengelmann

Last-Ditch Rescue For German Food Retailer

  • Why it matters

    Why it matters

    The deal will safeguard thousands of jobs but critics say it isn’t good for competition in the German food retail market.

  • Facts

    Facts

    • Mediation talks led by former Chancellor Gerhard Schröder to prevent a break-up of supermarket chain Kaiser’s Tengelmann have led to a breakthrough that will save thousands of jobs, said Economy Minister Sigmar Gabriel.
    • Details of the deal have yet to be thrashed out but media reported that rival retailer Rewe will purchase Kaiser’s stores in Berlin while Edeka will get the stores in Bavaria.
    • Edeka has been trying to take over loss-making Kaiser’s Tengelmann from the Tengelmann group since 2014.
  • Audio

    Audio

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Kaiser's stores will stay open after all, even if under the name of their competitors. Source: DPA

Mediation talks launched last week to avert the looming break-up of loss-making German supermarket chain Kaiser’s Tengelmann produced a deal that will safeguard the company’s 15,000 jobs, Economy Minister Sigmar Gabriel said on Monday.

“The mediation was completed successfully today,” Mr. Gabriel said. “I don’t expect there to be any more obstacles to implementing the mediation agreement.”

The talks were mediated by former German chancellor Gerhard Schröder. Unless there are any last minute hiccups, the outcome draws a line under two years of uncertainty for the food retailer, which until last week had appeared destined to be dismantled and sold off store by store in what would have led to heavy job losses.

“Cashiers, butchers, warehouse workers, drivers, office staff and all other employees of Kaiser’s Tengelmann can celebrate Christmas without having to worry about their jobs.”

Sigmar Gabriel, Economy Minister

It’s also a major victory for Mr. Gabriel, the leader of the center-left Social Democratic Party, who may run for the chancellorship in next year’s general election.

Mr. Gabriel said: “Cashiers, butchers, warehouse workers, drivers, office staff and all other employees of Kaiser’s Tengelmann can celebrate Christmas without having to worry about their jobs.”

Without a deal up to 8,000 jobs would have been in danger, he added.

An agreement to sell Kaiser’s Tengelmann to larger rival Edeka in 2014 was blocked by the Federal Cartel Office in 2015 on the grounds that it would hurt competition in the German food retail market. But Mr. Gabriel overturned the ban this year, issuing a decree allowing the takeover to go ahead.

Then supermarket chain Rewe took legal action and won a court injunction suspending Mr. Gabriel’s decree in July, which once again threw the future of Kaiser’s into doubt.

Under the mediation deal, Rewe will withdraw its lawsuit and Kaiser’s employees will get job guarantees for the next 7 years, said Mr. Gabriel.

According to Handelsblatt sources, Rewe will purchase Kaiser’s Tengelmann’s stores in Berlin. The exact purchase price should be agreed by the end of the week.

Other media reported that Edeka will get its outlets in Bavaria. Important details such as who will get the Kaiser’s stores in the state of North Rhine-Westphalia have yet to be agreed, the reports added.

The parties aim to reach a final agreement by November 11.

 

David Crossland is an editor with Handelsblatt Global. To contact the author: cermak@handelsblatt.com

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