Berlin, June 4 - A deal between German retailers Metro and Arcandor is an "interesting path" to pursue now that Arcandor's chances of getting state aid have faded, German Economy Minister Karl-Theodor zu Guttenberg said.
Speaking on Deutschlandfunk radio on Thursday, Guttenberg said the German retail sector had room to consolidate and suggested that Arcandor should consider a deal with Metro.
"I view this as an interesting path," he said, when asked about a deal between the two companies.
"In a sector that has to consolidate, it makes sense to talk about solutions involving the combination of companies. But it has to happen fast."
Arcandor's bid for 650 million euros ($922 million) in state aid from a German rescue fund for crisis-hit companies looks doomed after the European Commission said the firm's woes pre-dated the crisis -- a key criteria for qualifying for help.
European Industry Commissioner Guenther Verheugen, also speaking on Deutschlandfunk, denied that Brussels had ruled out aid for Arcandor, saying the case would be examined closely if Germany approved it.
"The Commission only said that in the case of Arcandor, if it came to that point, that it would have to be notified, that the case would have to be examined and either approved or rejected," Verheugen said.
But Guttenberg said the message from the Commission had been clear and that it was time for Arcandor to seek investor-driven solutions to its woes.
"The signals from Brussels are unfortunately very clear and that means that the German rescue fund, in all likelihood and in my view, cannot be used here," Guttenberg said.
"The priority is (help) from the private sector," he added, pointing to investors, banks and the major shareholders in Arcandor.
"That does not exclude that a credit from (state bank) KfW could be examined. But there are also strict criteria here which must be respected," he said.
The head of Metro Eckhard Cordes will travel to Berlin for meetings in the chancellor's office later this week, a German newspaper reported.