Germany's Metro said on Monday it was selling its Galeria Kaufhof chain to Canadian department store operator Hudson's Bay for 2.82 billion euros ($3.17 billion) including certain liabilities.
The sale includes the Galeria Kaufhof department store business in Germany and the Galeria Inno department stores in Belgium, as well as a corresponding real estate portfolio, Metro said in a statement.
Metro said it expected the sale would have a positive effect of around 700 million euros on earnings before interest and tax (EBIT) and allow it to cut net debt by about 2.7 billion euros.
Asked in a conference call about prospects for a special dividend, Metro CEO Olaf Koch said his focus was investing in new countries and paying down debt.
Sources had previously told Reuters that Hudson's Bay was in the lead to buy the German chain, and had made a non-binding offer for Kaufhof with a value similar to a separate bid by Austrian investor Rene Benko, who offered 2.9 billion euros.
Reuters reported news of the deal on Sunday.
HBC said in a separate statement the deal was expected to deliver immediate value to its shareholders.
The companies said HBC would work with Kaufhof's current management and take on the chain's 21,500 employees in Germany and Belgium, with extensive commitments to maintain staff levels and store count.
The deal is due to close at the end of September.