Merger talks
June 7, 2009
As employees of department stores owned by financially troubled Arcandor held sit-ins and vigils on Sunday to underscore their concern about the fate of the giant department store, executives from Arcandor and Metro met to discuss a possible merger.
The urgency of the situation increased markedly after German Chancellor indicated in the press that government help was unlikely.
"I find it unacceptable that people call on the State for help when they themselves must do something," said Merkel to the Bild daily newspaper over the weekend.
Employees express their concerns
At the group's Karstadt department store in Wismar, in northern Germany, protesters gathered signatures from passers-by and symbolically occupied the building in a final effort to save their jobs. Similar action was planned for other locations throughout Germany.
The 11th-hour protests come as Arcandor prepares to file for bankruptcy as early as Monday, if it does not receive an emergency line of credit from the German government.
German Transport Minister Wolfgang Tiefensee, a Social Democrat, has planned a meeting for Monday between the mayors of the affected cities and Arcandor executives. One of the key issues under discussion will be possible aid from an existing urban planning fund.
"Department stores make our inner-cities attractive. If they go, city centers are no longer a magnet," Tiefensee said.
Still more questions than answers
German Chancellor Angela Merkel, on the other hand, has said she is against offering the beleaguered retailer a bailout with state aid and has demanded that the owners of the German department store Karstadt, the mail order house Quelle and the Thomas Cook travel agencies answer a few questions first.
"I don't understand at all why some members of the Social Democratic Party want to burden German taxpayers with a risk instead of tackling the causes," the chancellor told Bild am Sonntag newspaper last week, referring to her coalition partners in the government who are in favor of getting the state involved.
Merkel said the owners and creditors needed to explain why some parts of the company, such as travel operator Thomas Cook, are still financially sound.
Merkel, leader of the governing Christian Democrats, has recommended that Arcandor seek a deal with rival Kaufhof or sell off its Karstadt assets to German retail conglomerate Metro, which has already expressed interest.
Asking for aid
Arcandor announced last Friday that it had asked Berlin for a government-backed loan of 437 million euros ($620 million) in an attempt to keep the company afloat.
A previous application for government loan guarantees totaling 650 million euros has run into resistance from EU officials.
Essen-based Arcandor says it needs a loan to keep it on its feet for the next six months. The money, it's hoping, could be issued by the state-owned KfW development bank.
gb/dpa/AP
Editor: Kateri Jochum