Germany's Karstadt is in negotiations with potential buyer

Karstadt, the German department-store chain owned by insolvent retailer Arcandor AG, started talks with a third suitor, which is examining the division s books, a spokesman for the bankruptcy administrator said.

The potential buyer has shown its serious interest and started the due diligence process and talks with Karstadt s management at the beginning of the week, Thomas Schulz, the Cologne, Germany-based spokesman for administrator Klaus Hubert Goerg, said today in a phone interview. He declined to disclose who is considering an offer for Karstadt.

Goerg began talks in February with six potential buyers of Karstadt, which employs 25,000 people. Private-equity company Triton, the only bidder to identify itself, said yesterday that it s reassessing whether to proceed as the failure of talks with the Ver.di labor union may make terms of its offer obsolete.

Highstreet, the Karstadt landlord that s 51 percent-owned by Goldman Sachs Group Inc., is also examining the retailer s accounts and may present a bid before the May 28 deadline, according to two people familiar with the matter, who declined to be identified because the plans aren t public. Highstreet may seek investment partners, including Triton, to contribute equity to an offer, one of the people said.

Highstreet, which would require approval from its lenders to buy Karstadt, would seek more flexibility on issues such as opening hours to reduce costs, the person said. If Highstreet goes ahead with a purchase, it would consider selling the department-store chain later on, the person said.

Arcandor, which is based in Essen, Germany, set up Highstreet in 2006, selling a majority holding to Goldman Sachs s Whitehall real estate funds for 3.7 billion euros ($4.6 billion). Two years ago, the retailer sold its remaining 49 percent stake in Highstreet for 800 million euros to a group formed by Pirelli & C. Real Estate SpA, Deutsche Bank AG s RREEF Real Estate, Generali Real Estate Fund SA and Borletti Group.

Voicemail messages seeking comment from a spokesman for Highstreet weren t immediately returned.

Triton has no further talks planned with union representatives, said John Mengers, an external spokesman for the company at Communications & Network Consulting AG in Munich.