By  on February 10, 2006

MONTREAL — Sears Holdings said it expects to mail out its takeover offer soon to shareholders of Sears Canada for all the outstanding shares it already doesn't own.

The company, based in Hoffman Estates, Ill., is offering $730 million, converted from Canadian dollars, to buy the 46.2 percent of shares outstanding, or about $14.73 a common share in cash. The distribution was announced last year by Sears Canada after it sold its credit card division to J.P. Morgan Chase & Co. for $1.92 billion.

Sears Holdings' proposal is backed by Sears Canada's second-largest shareholder, Natcan Investment Management, which owns a 9 percent stake.

"We are fully committed to moving forward with our offer at $16.86 [Canadian currency] per share and purchasing any shares tendered at that price, including those owned by Natcan," Sears Holdings vice chairman Alan Lacy said in a written statement. "We believe that most Sears Canada shareholders will agree that ... is a fair price and will tender their shares to our offer once it is formally made."

Sears Canada could not be reached for comment. However, one analyst doesn't think the offer will be increased.

"The market has established the value of the shares at that price," said Don Povilaitis of Standard & Poor's debt rating agency in Toronto. "If it is rejected, there is very little the minority shareholders can do, as there aren't any other offers on the table."

Although its original offer looked for a majority of the outstanding shares, Sears Holdings said it will buy whatever shares are tendered before the expiration date.

"We feel it is important to communicate to shareholders that we intend to purchase all validly tendered shares and, while we would prefer to own 100 percent of Sears Canada, we are committed to increasing our ownership through this offer in any case," Lacy said.

Sears Canada operates 188 corporate stores, 180 dealer stores and 67 home improvement showrooms.

Last week, the company reported a profit of $89.4 million, or 83 cents a share, for the fourth quarter ended Dec. 31, compared with $76.5 million, or 72 cents, a year earlier.Profit in both years excludes nonrecurring items. In the 2005 quarter, Sears sold its credit card and financial services business to J.P. Morgan Chase & Co. for an aftertax gain of $593 million. That and other unusual items boosted final profit to $686.8 million, or $6.40 a share, versus $83.1 million, or 78 cents.

Revenue during the latest quarter was $1.67 billion compared with $1.68 billion in the same year-ago period. Same-store sales were up 1.1 percent during the quarter, but off 2.9 percent for the year.

For the full year, Sears said profit was $113.9 million, or $1.06 a share, compared with $107.6 million, or $1, during the previous year. Including nonrecurring items, profit was $675.8 million, or $6.33 a share, versus $112.8 million or $1.06. For the year, revenue was $5.47 billion compared with $5.46 billion for 2004.

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