2nd UPDATE: Berggruen Holdings Wins Bid For Karstadt

Billionaire investor Nicolas Berggruen has won a bid to acquire German retailer Karstadt, ending a months-long saga to line up new owners for the insolvent department store chain.

Terms of the deal weren't immediately provided by Karstadt's insolvency administrator or Berggruen's holding company, which announced the deal late Monday.

Berggruen's deal rescues one of Germany's most iconic retail brands from a breakup that would have been launched under German insolvency law if its administrator, Klaus Hubert Goerg, had failed to line up a bidder by the end of Monday. Karstadt is a former unit of holding company Arcandor AG (ACAGF, ARO.XE), which filed for insolvency last year after failing to line up a government rescue.

Karstadt employs more than 25,000 staff at approximately 120 locations around Germany and is a fixture in most major German cities.

Berggruen's offer beat out binding bids from another private investment fund, Triton, as well as real estate consortium Highstreet, led by Goldman Sachs Group Inc. (GS).

Highstreet owns around two-thirds of Karstadt's properties. The consortium had sought foremost to prevent a breakup of Karstadt, which would have left it on the hook to find new renters for Karstadt's major storefront properties.

A spokesman for Triton acknowledged the deal decision and said Berggruen Holdings had been "more ready to compromise" in its dealings than Triton.

While specific terms of the deal weren't immediately disclosed, Berggruen has previously said his bid included a partnership with U.S. fashion label BCBGMaxAzriaGroup Inc. aimed at improving Karstadt's marketing and adding "something fresh."

Berggruen further curried favor with Karstadt's influential union representatives by agreeing to keep jobs in place and invest "as much as needed" in the retailer's long-term well-being. He has also sought to lower rents with Karstadt property owners like Highstreet.

Berggruen, whose father was a famous art dealer who fled Nazi Germany, was met with initial skepticism when he emerged at the last minute as a bidder for Karstadt in May.

His investment fund is "open to exploring unconventional opportunities and financial structures" ranging from "modest commitments to $100 million in any single transaction," according to its website.

Goerg plans to sign a deal with Berggruen on Wednesday, which will be followed by a Thursday court hearing in the German city of Essen to approve the contract with Berggruen.

-By the Frankfurt Bureau, Dow Jones Newswires; [phone]; [e-mail]