Praktiker in talks to sell insolvent German DIY unit to rival
FRANKFURT (Reuters) - Insolvent German home improvement store chain Praktiker group (PRAG.DE) on Thursday said exclusive talks were under way to sell its upmarket brand Max Bahr stores to rival Hellweg.
Praktiker, a household name in Europe's biggest economy, is being sold off piecemeal after the administrator failed to find a buyer for the whole group.
"The creditor committee today decided to conduct final negotiations about a takeover with the Hellweg bidder consortium," Praktiker said in a statement that cited Max Bahr's insolvency administrator.
Hellweg has teamed up with former Max Bahr chief Dirk Moehrle and is in advanced talks to buy 73 Max Bahr stores for more than 100 million euros ($136.6 million), sources familiar with the transaction told Reuters earlier on Thursday.
However, it has no interest in 50 sites that were recently reflagged from Praktiker to Max Bahr.
Talks are to be concluded by the end of October, the sources added.
Hellweg had initially struggled to line up financing for the deal, but is close to clinching an arrangement to borrow over 60-65 million euros from Commerzbank (CBKG.DE) and other lenders, a financial source said.
Hellweg was not immediately available for comment.
Despite the prospective sale, holders of bonds issued by the Praktiker group are unlikely to recoup any of their investment, a bondholder representative said.
Ingo Scholz, a lawyer who represents holders of a 250 million euro bond, said the break-up of the business was likely to cover the costs of insolvency proceedings but little else.
Praktiker, whose blue-and-yellow-branded stores selling paints, tools and gardening products are a familiar sight in Germany's out-of-town shopping centers and who employed around 20,000 full- and part-time staff, filed for insolvency in July after talks with creditors failed.
The creditors had hoped that a sale of Max Bahr could help them recover some of their losses, but those hopes died when Max Bahr also filed for insolvency.
The Praktiker stores have started a clearance sale so their empty shells can be sold off individually. Several of Praktiker's peers have expressed interest in buying individual outlets, the administrator said.
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