NEW YORK — Investors’ reactions to Wall Street’s newest retail behemoth, Sears Holdings Corp., was ho-hum.
Shares of the newly minted company lost 1.1 percent in the first day of trading on the Nasdaq exchange.
The merger between Sears, Roebuck & Co. and Kmart Holding Corp. is the brainchild of investment guru and Kmart chairman Edward Lampert, founder of ESL Investments, which bailed Kmart out of bankruptcy.
The merged company’s stock trades under the ticker symbol “SHLD,” which closed Monday’s session at $131.11 after opening at $132.52. Just over 3.5 million shares traded hands.
On Thursday, Sears, Roebuck and Kmart shareholders approved the $11 billion merger. As previously reported, 69 percent of Kmart shareholders agreed to the purchase in what was a five-minute meeting. Sears shareholders also approved the merger with 69 percent in favor of the deal.
Kmart shares had traded on the Nasdaq since 2003 under the symbol “KMRT,” according to a written statement released Monday from the Nasdaq, while shares of Sears had traded on the New York Stock Exchange for 95 years under the “S” ticker.
Sears Holdings executives rang the Nasdaq’s opening bell Monday morning at the electronic exchange’s site in Times Square. “Sears and Kmart are two of the great iconic American companies, and true to their status, they have embraced new ways of thinking,” said Bob Greifeld, president and chief executive officer of the Nasdaq, in the statement.
After the bell, shares of Sears Holdings fell almost immediately to around $129. By midday, the stock was hovering around the $132 mark, before dropping to about $131, where it stood for the rest of the day. The stock of the new company is a component of the S&P 500 index.
Meanwhile, Standard & Poor’s Rating Services and Fitch Ratings on Monday each assigned Sears Holdings a credit rating. Standard & Poor’s assigned a “BB plus” credit rating to Sears Holdings with a negative outlook, citing “an increase in business risk for the combined company.”
“Both Sears and Kmart will continue to be challenged to improve store productivity and profitability,” said analyst Gerald Hirschberg in a statement. He also cited as challengers competition from the department store sector and from megaretailer Wal-Mart Stores Inc., as well as possible difficulties integrating the corporate cultures of the two companies.
This story first appeared in the March 29, 2005 issue of WWD. Subscribe Today.
Fitch Ratings assigned Sears Holdings’ senior unsecured debt a rating of “BB” with a negative outlook. Fitch gave Sears Holdings’ $4 billion, five-year senior secured revolving credit facility a “BBB minus” rating.