tekkmortal
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Retail giant will compete with Wal-Mart, Target
By Megan Reichgott
The Associated Press
Chicago - Discount retailer Kmart Holding Corp. is combining with one of the most venerable names in U.S. retailing, Sears, Roebuck & Co., in a surprise $11 billion deal that will create the nation's third largest retailer.
The company being created by the combination announced today would be known as Sears Holdings Corp., but it was clearly orchestrated by Kmart chairman and Sears shareholder Edward Lampert, who will lead a new board that will be dominated by Kmart directors.
It will continue to operate the Kmart and Sears stores under their current brand names.
The deal marks a remarkable comeback for Kmart, once known for its "Blue Light Specials," which had scaled back operations after seeking bankruptcy protection in 2002.
Sears' roots date to the late 1800s when it offered merchandise by mail order to farmers. It opened its first retail store in 1925 and eventually became the nation's biggest retailer.
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The combined company is expected to have $55 billion in annual revenues and nearly 3,500 stores. That means it will trail only Wal-Mart and Target among the biggest U.S. retailers.
It will have its headquarters in the northwestern Chicago suburb of Hoffman Estates, home of Sears, but will maintain a "significant presence" in Troy, Mich., where Kmart is based.
Under the agreement, unanimously approved by both companies' boards of directors, Kmart shareholders will receive one share of new Sears Holdings stock for each Kmart share.
Sears, Roebuck shareholders can choose $50 in cash or half a share of Sears Holdings stock. That portion of the deal values Sears shares at $11 billion, a 10.6 percent premium over its value at Tuesday's close.
With Lampert as chairman, Sears CEO Alan Lacy will be vice chairman and CEO of the new company. The 10-member Sears Holdings board will have seven members from Kmart and three from Sears.
Lampert, Kmart's majority shareholder, is also Sears' largest shareholder, holding a 15 percent stake in Sears through his ESL Investments Inc.
The merger, expected to close by the end of March, is subject to approval by Kmart and Sears shareholders and regulatory agencies.
Kmart filed for Chapter 11 bankruptcy protection in early 2002, leading to the closing of about 600 stores, termination of 57,000 employees and cancellation of company stock.
It emerged from bankruptcy in May 2003 and on today posted its fourth consecutive quarterly profit. Its stock price has risen to $101.22 on Tuesday from $15 a share when it emerged from bankruptcy.
Sears had long fallen out of favor on Wall Street after losing ground to competitors and enduring sluggish sales for years.
The company last fall introduced its Sears Grand stores, which offer grocery and convenience items besides traditional Sears fare such as clothing, home appliances and tools.
Kmart has been shedding many of its underperforming stores, a strategy that has helped it bounce back. In fact, it has sold 50 of those stores to Sears for $575 million.
It has appeared that Sears could be shifting toward a similar real estate strategy since the disclosure that Vornado Realty Trust, a real estate investment trust, had purchased a 4.3 percent interest in the chain. Since that Nov. 5 announcement, Sears' stock has jumped 25 percent, closing at $45.20 Tuesday.
The merger will not affect agreements to carry home and fashion lines including Martha Stewart Everyday, Lands' End and Sesame Street, the companies said.
Wal-Mart dethroned Sears as the nation's largest retailer in 1991.
Sears dates to 1886, when Richard W. Sears started a watch company. Alvah C. Roebuck joined the company the following year as a watchmaker, and within a few years they expanded to a mail-order general merchandise business. The first Sears catalog was issued in 1896. The company opened its first stores in the 1920s.
The first Kmart discount store was opened in 1962 by the S.S. Kresge Co., the retail chain founded in 1899 by Sebastian S. Kresge. By 1976, with Kmart sales topped 90 percent of Kresge's total sales, the company name was changed to Kmart Corp.
Wimps! :greddy:
By Megan Reichgott
The Associated Press
Chicago - Discount retailer Kmart Holding Corp. is combining with one of the most venerable names in U.S. retailing, Sears, Roebuck & Co., in a surprise $11 billion deal that will create the nation's third largest retailer.
The company being created by the combination announced today would be known as Sears Holdings Corp., but it was clearly orchestrated by Kmart chairman and Sears shareholder Edward Lampert, who will lead a new board that will be dominated by Kmart directors.
It will continue to operate the Kmart and Sears stores under their current brand names.
The deal marks a remarkable comeback for Kmart, once known for its "Blue Light Specials," which had scaled back operations after seeking bankruptcy protection in 2002.
Sears' roots date to the late 1800s when it offered merchandise by mail order to farmers. It opened its first retail store in 1925 and eventually became the nation's biggest retailer.
Advertisement
The combined company is expected to have $55 billion in annual revenues and nearly 3,500 stores. That means it will trail only Wal-Mart and Target among the biggest U.S. retailers.
It will have its headquarters in the northwestern Chicago suburb of Hoffman Estates, home of Sears, but will maintain a "significant presence" in Troy, Mich., where Kmart is based.
Under the agreement, unanimously approved by both companies' boards of directors, Kmart shareholders will receive one share of new Sears Holdings stock for each Kmart share.
Sears, Roebuck shareholders can choose $50 in cash or half a share of Sears Holdings stock. That portion of the deal values Sears shares at $11 billion, a 10.6 percent premium over its value at Tuesday's close.
With Lampert as chairman, Sears CEO Alan Lacy will be vice chairman and CEO of the new company. The 10-member Sears Holdings board will have seven members from Kmart and three from Sears.
Lampert, Kmart's majority shareholder, is also Sears' largest shareholder, holding a 15 percent stake in Sears through his ESL Investments Inc.
The merger, expected to close by the end of March, is subject to approval by Kmart and Sears shareholders and regulatory agencies.
Kmart filed for Chapter 11 bankruptcy protection in early 2002, leading to the closing of about 600 stores, termination of 57,000 employees and cancellation of company stock.
It emerged from bankruptcy in May 2003 and on today posted its fourth consecutive quarterly profit. Its stock price has risen to $101.22 on Tuesday from $15 a share when it emerged from bankruptcy.
Sears had long fallen out of favor on Wall Street after losing ground to competitors and enduring sluggish sales for years.
The company last fall introduced its Sears Grand stores, which offer grocery and convenience items besides traditional Sears fare such as clothing, home appliances and tools.
Kmart has been shedding many of its underperforming stores, a strategy that has helped it bounce back. In fact, it has sold 50 of those stores to Sears for $575 million.
It has appeared that Sears could be shifting toward a similar real estate strategy since the disclosure that Vornado Realty Trust, a real estate investment trust, had purchased a 4.3 percent interest in the chain. Since that Nov. 5 announcement, Sears' stock has jumped 25 percent, closing at $45.20 Tuesday.
The merger will not affect agreements to carry home and fashion lines including Martha Stewart Everyday, Lands' End and Sesame Street, the companies said.
Wal-Mart dethroned Sears as the nation's largest retailer in 1991.
Sears dates to 1886, when Richard W. Sears started a watch company. Alvah C. Roebuck joined the company the following year as a watchmaker, and within a few years they expanded to a mail-order general merchandise business. The first Sears catalog was issued in 1896. The company opened its first stores in the 1920s.
The first Kmart discount store was opened in 1962 by the S.S. Kresge Co., the retail chain founded in 1899 by Sebastian S. Kresge. By 1976, with Kmart sales topped 90 percent of Kresge's total sales, the company name was changed to Kmart Corp.
Wimps! :greddy:
I just checked the newspaper this morning. Walmart makes more than 5 times of what Sears and Kmart makes together. 
<- DD
I'd rather see K-Mart back being number one again! I don't care for Wal-Mart!