"Germany has had its Woolworths moment," said Lex in the FT. Arcandor, a 128-year-old German retailer that also owns 53% of British travel operator Thomas Cook, filed for insolvency this week after the German government refused it state aid. It marks Germany's biggest non-bank collapse in this crisis.
It's good news that the government "didn't succumb to the impulse to save jobs" in this case, said FAZ.net. State money would simply have delayed the day of reckoning. Arcandor's problem was that its department stores were in structural decline. The market has polarised between specialist, high-end retailers and discounters; "there wasn't much demand anymore" for mid-price department stores, said Josef Auer of Deutsche Bank.
Arcandor's only profitable business, Thomas Cook, is set to be sold off. The "tantalising prospect" for shareholders is that someone will buy the stake as a prelude to a full bid, said Ian King in The Times. Germany's tour operator Rewe has said it is interested.
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But despite the industrial logic of two tour groups combining, Rewe will struggle to come up with the £2bn-plus its UK rival would fetch. A share placing looks more likely, said Lex. As Thomas Cook has "healthy prospects in a European market it now dominates with Tui Travel", it shouldn't have any trouble attracting interest.
TCG: 217p; 12m change 0%
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