The agreements are the latest in a series of consolidation moves by European retailers struggling to compete with Amazon and other e-commerce providers.

(Bloomberg)—Two of the most storied names in German department stores are combining in a deal orchestrated by an Austrian real estate billionaire, highlighting the pressures facing traditional retailers amid the rise of Amazon.com Inc., No. 1 in the Internet Retailer 2018 Top 500.

Karstadt, controlled by Rene Benko’s Signa Holding GmbH, agreed to take over Galeria Kaufhof, owned by Saks Fifth Avenue parent Hudson’s Bay Co. (No. 36), creating a retail company with 5.4 billion euros ($6.3 billion) in revenue. Benko has long wanted to merge the brands, having had an overture rejected as recently as February.

Signa Retail GmbH will own 50.01% of the venture, which Karstadt CEO Stephan Fanderl will lead, Hudson’s Bay said in a statement Tuesday. Each company will invest 100 million euros ($115.9 million) in the combined entity, which will also receive 200 million euros ($231.8 million) from the sale of two buildings.

In a separate transaction, affiliate Signa Prime Selection AG is buying a 50% stake in Hudson’s Bay’s European real estate holdings, along with Kaufhof stores in Cologne and Dusseldorf, Germany. That deal values the real estate assets at 3.3 billion euros and will generate proceeds of C$616 million ($469 million) for Hudson’s Bay, earmarked for debt repayment.

The agreements are the latest in a series of consolidation moves by European retailers struggling to compete with Amazon and other e-commerce providers. Last month U.K. billionaire Mike Ashley’s Sports Direct International Plc, No. 50 in the Internet Retailer 2018 Europe 500, agreed to buy British department-store chain House of Fraser Ltd. (No. 62), as questions swirl around the future of rival Debenhams Plc (No. 30).

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Coming only three years after Hudson’s Bay ventured into Europe, the two pacts are also the biggest moves to date by new CEO Helena Foulkes, who pledged that “everything’s on the table” as she tries to turn the company’s fortunes around. In June, she announced plans to divest flash-sale website Gilt and close 10 Lord & Taylor stores.

Tuesday’s announcement is a turnaround for Hudson’s Bay, which said in spurning the February offer from Signa that the European business and real estate assets were “critical components of our long-term strategy.”

The Canadian company’s Europe operations, which also include the Inno chain, account for more than a quarter of total revenue. But the region has been a weak spot for Hudson’s Bay, with comparable-store sales there falling in seven of the past eight quarters. Foulkes has said that the company’s eponymous stores it had opened so far in the Netherlands haven’t met expectations.

Hudson’s Bay is boosting investment in e-commerce, store renovations and new stores. It has already cut jobs and partnered with Walmart Inc. and WeWork Cos. The Toronto-based company unloaded a minority stake to a private equity firm and sold its flagship Lord & Taylor building on Fifth Avenue in Manhattan.

The real estate deal announced Tuesday helps Hudson’s Bay to meet a key demand from activist investor Jonathan Litt, who’d complained the company wasn’t making the most of its buildings’ value.

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In a phone interview, Foulkes said she felt the hardest part of her efforts is over.

“There’s also a really big opportunity to run a much better business in North America,” she said. “This transaction will allow us to go after that opportunity.”

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