NEW YORK — The $11 billion Sears-Kmart merger became a done deal Thursday, and Edward Lampert’s first proclamation as chairman of the new Sears Holdings Corp. was that Lands’ End isn’t for sale.
Lampert’s disclosure that the catalogue firm would stay under the Sears umbrella came during a news conference at Sears’ headquarters in Hoffman Estates, Ill., after shareholders of the chains approved Kmart Corp.’s buyout of Sears, Roebuck & Co., creating the third biggest U.S. retailer with $55 billion in combined sales.
“This is a very powerful merger economically,’’ said Sears chairman and chief executive officer Alan Lacy.
Sears began shopping Lands’ End in February, and had made presentations to private equity firms such as Texas Pacific Group, said bankers and a financial analyst in New York. They also said overtures had been made to David Dyer, president and ceo of Tommy Hilfiger Corp. and former president and ceo at Lands’ End. In addition, three private equity groups interested in making a play for the catalogue firm were said to have approached former Lands’ End ceo Michael Smith to gauge his interest in returning to the fold.
Sears bought Lands’ End for $1.9 billion in 2002. The asking price when the firm was shopped in the last few weeks was $1.2 billion.
The vote of shareholders culminated a process that began in November, when the merger was announced. Kmart shareholders voted first, with 69 percent agreeing to the purchase in what was a five-minute meeting. Sears shareholders voted a few hours later, also with 69 percent in favor of the deal.
Shares of Kmart jumped $7.69 to close at $132.52 in trading Thursday on the New York Stock Exchange. Shares of Sears moved in the opposite direction, falling by $6.76 to close at $50.04 in trading on the Big Board.
Lampert, founder and chairman of ESL Investments, the hedge fund that bailed Kmart out of bankruptcy in 2003, is the largest shareholder of both Kmart and Sears and the mastermind behind the deal. In addition to Lampert, Lacy becomes vice chairman and ceo of the new combined firm. Aylwin Lewis, ceo of Kmart, is president of Sears Holdings and ceo of Sears Retail division.Sears Holdings is expected to trade today for the first time on the New York Stock Exchange under the ticker symbol SHLD. It also will be listed on the S&P 500 Index.
The merger effectively ends the 119-year run of Sears, Roebuck, even though its Sears nameplate will survive. The company was founded by Richard Sears in 1886 as R.W. Sears Watch Co. in Minneapolis. Sears moved his business to Chicago the next year, shortly before Alvah Roebuck joined the business. By 1894, the two operated a successful mail-order firm that sold mostly watches and jewelry. In 1895, they expanded their catalogue operation to include categories such as women’s apparel and millinery, wagons, fishing tackle, stoves, furniture, china, saddles and firearms. In 1893, the firm changed its name to Sears, Roebuck and Co.
Kmart’s beginning in 1899 was as a five-and-dime in downtown Detroit, opened by Sebastian Spering Kresge. After years operating stores as S.S. Kresge Co., the company name changed in 1977 to Kmart Corp., reflecting its newer discounting store format. Kmart’s business operation was moved to Kmart Holding Corp. when it came out of bankruptcy on May 6, 2003. Kmart Corp. the holding company was left mired in bankruptcy proceedings to field administrative claims. The Kmart nameplate also survives in the merged entity.
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