Arcandor was Germany's retail giant — then a rejected €650M loan killed it

Arcandor AG was formed in 1999 by the merger of Karstadt, Germany's oldest department store chain founded in 1881, with Quelle, the country's largest mail-order company founded in 1927. At its peak, Arcandor employed 68,000 people and generated annual sales of €15.5 billion. Its holdings included the iconic KaDeWe in Berlin, Karstadt's 90 department stores, Quelle's catalogue business, and a 52% stake in Thomas Cook Group.

The merger failed to create a viable retail model. Karstadt's department stores were struggling against discount chains and online competitors. Quelle's catalogue business was being killed by internet shopping. Arcandor had sold its department store properties and leased them back, leaving it without real estate assets. When the 2008 financial crisis hit, the company's structure crumbled.

In June 2009, Arcandor requested €650 million in loan guarantees from the German government. The European Commission rejected the application. Three days later, on 9 June 2009, Arcandor filed for bankruptcy. CEO Thomas Middelhoff faced investigations for breach of trust. Quelle was liquidated later that year, eliminating 10,000 jobs. Karstadt was sold to American investor Nicolas Berggruen in 2010, saving only a fraction of the original business.