Company officials say it would receive an immediate cash payment of euro 3.7 billion ($4.6 billion) from the joint-venture sale and expects an additional euro 8 billion ($9.6 billion) to come from an appreciation of the assets. In a statement, KarstadtQuelle executives said the transaction allows for "the complete redemption of group financial liabilities." At the end of the third quarter of last year, KarstadtQuelle's debt stood at around euro 4 billion ($4.8 billion).

It also said that, independent of the Whitehall transaction, it expects an additional euro 6 billion ($7.2 billion) to be generated from the further sale of properties such as office buildings, land and other assets. The company said it believes its department-store assets have a high-value appreciation potential. "In light of this, the management decided to chose a strategic option that provides the inflow of cash and safeguards the further participation in the value appreciation of these real estate assets."

KarstadtQuelle said it would achieve new flexibility for development and growth, based on a less capital-intensive business model. It added that, through the sale, it would achieve a high extraordinary income in its 2006 financial year and "benefit from a sustainable and significant improvement of its group earnings." The transaction is subject to the approval of KarstadtQuelle's supervisory board.