October 7, 2014 / 1:40 PM / 4 years ago

German supermarket chain Kaiser's sold to bigger rival Edeka

The logo of German supermarket chain Edeka is pictured out side a store in Berlin, May 29, 2013. REUTERS/Fabrizio Bensch

DUESSELDORF Germany (Reuters) - German retail holding group Tengelmann is selling its grocery unit Kaiser’s to the country’s biggest supermarket chain Edeka as it is too small to compete in a tough market dominated by bigger players.

Tengelmann, which also owns home improvements chain OBI and discount fashion group KiK, said it was selling the loss-making chain with 451 stores, around 16,000 employees and a turnover of about 1.8 billion euros ($2.3 billion).

“Unfortunately, we don’t seen any prospect of making our supermarkets into a profitable company on our own,” Tengelmann boss Karl-Erivan Haub said on Tuesday.

The two companies said they would give no financial details of the transaction.

Haub said Kaiser’s, which only has a market share of 0.6 percent, was too small to compete against bigger rivals like Aldi, Lidl, the Real hypermarkets owned by retail group Metro MEOG.DE or privately-owned Rewe.

Cooperative Edeka, which runs 11,600 stores and recorded sales of 46.2 billion euros in 2013, will also take over Tengelmann’s online subsidiary which runs the Plus.de and GartenXXL.de websites.

The deal is set to be completed on June 30, 2015 assuming it wins approval from the German competition authority, which has recently expressed concern about the fact that Edeka, Rewe, Aldi and the Schwarz Group that owns Lidl already account for 85 percent of the market.

Reporting by Matthias Inverardi, writing by Emma Thomasson; Editing by Georgina Prodhan

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