Berlin - Wal-Mart Stores Inc. said Friday it plans to sell its 85 stores in Germany to rival Metro AG, a move that effectively ends a nearly decade-long effort by the world's largest retailer to crack the market in Europe's biggest economy.

Terms were not disclosed, but Wal-Mart said it expects to incur a loss before taxes of about $1 billion related to the deal in its second quarter.

A man collects shopping trolleys at a Wal-Mart store in Dortmund, Germany, Friday, July 28, 2006. Wal-Mart said Friday it agreed to sell its 85 stores in Germany to Metro AG, effectively ending the US giant's less than ten years of trying to crack the market in Europe's largest economy. [AP]

It would be the U.S.-based company's second international withdrawal this year. Wal-Mart pulled out of the highly competitive South Korean market in May. The retailer is concentrating on expanding in China and Central America.

"As we focus our efforts on where we can have the greatest impact on our growth and return on investment strategies, it has become increasingly clear that in Germany's business environment, it would be difficult for us to obtain the scale and results we desire," Michael Duke, a vice chairman of Bentonville, Ark.-based Wal-Mart, said in a statement.

Under the proposed deal with Metro, the German retailer will take over 19 pieces of Wal-Mart real estate and lease the remainder of the other locations. The deal is subject to approval by authorities.

The stores, which had sales near 2 billion euros (US$2.55 billion) in 2005, will be incorporated into Metro's Real Hypermarket brand.

The addition of Wal-Mart's warehouses and logistics systems are expected to strengthen the position of Metro's existing 550 Real stores in the German market.

While financial terms of the deal were not disclosed, Duesseldorf-based Metro said it would book a one-time gain from the acquisition as the assets are worth more than the purchase price.

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