Canadian retail group Hudson's Bay (HBC) has acquired the Galeria Kaufhof department store chain from German retail conglomerate Metro Group in a move that will allow it to expand its presence in Europe.

The deal, for EUR2.82bn (US$3.17bn), which includes Metro's Belgian subsidiary Inno, will see HBC take over 103 Galeria Kaufhof stores in Germany, 16 Sportarena stores, 16 Inno department stores in Belgium, the Kaufhof Cologne head office, and various logistics centres, warehouses and other properties.

Hudson's Bay said it will continue to operate Galeria Kaufhof, Inno and Sportarena under their current brand banners, and Kaufhof's existing management team is expected to remain in place after the transaction has closed.

"This is an exciting transaction that demonstrates our proven growth formula in action, and it is the right investment and the right time," said Richard Baker, HBC’s executive chairman. "We have been carefully surveying the European retail landscape for many years for a potential expansion opportunity and have watched Galeria Kaufhof build on its exceptional real estate to become the number one department store in Germany."

Galeria Kaufhof has said it will work with HBC's leadership team to "explore opportunities to further strengthen" the brand's consumer offerings, which are expected to include: expanding the Galeria Kaufhof brand matrix; aggressively growing e-commerce; optimising key merchandise categories; and pursuing the opportunity to introduce the Saks Fifth Avenue and the Saks Off 5th banners in Germany and Belgium. It will also look at building within the existing store network to improve productivity and optimise floor space.