Investor group wants Karstadt, Hertie merger-paper

FRANKFURT, June 12 (Reuters) - A group of investors is interested in merging Hertie, an insolvent department store chain, and parts of Arcandor's (AROG.DE: Quote, Profile, Research) department store chain Karstadt, a German daily said on Friday.

The group comprises five retail managers and a Chinese financial partner, Frankfurter Allgemeine Zeitung said, citing the group's spokesman Rolf Schuchardt.

The mayors of the cities where Hertie stores are located have asked Deutsche Bank (DBKGn.DE: Quote, Profile, Research) to organise a meeting in the next 14 days to discuss the merger concept with U.K. financial investor Dawnay Day, owner of Hertie, and Hertie's insolvency administrator.

Hertie's creditor group last month decided to close down the department store chain in two months time.

The German government let Arcandor slide into insolvency on Tuesday by denying its requests for state aid, putting about 43,000 jobs at the retailer at risk.

Arcandor's chief executive said on Thursday his company would continue talking with rival Metro (MEOG.DE: Quote, Profile, Research) about a possible merger of their department store chains but said it would also hold talks with other parties.

(Reporting by Marilyn Gerlach; Editing by Erica Billingham)