SEARS CANADA TO BUY BANKRUPT T. EATON’S
Byline: Vicki M. Young / Thomas Cunningham
NEW YORK — In a move that would save up to 1,000 Canadian retail jobs, Sears Canada is buying bankrupt T. Eaton’s for at least $20.3 million.
The purchase, which is subject to the approval of the Canadian bankruptcy court and Eaton’s creditors, is expected to close by yearend, Sears said Monday. The deal does not include Eaton’s credit card operation. Sears said it would pay Eaton’s another $13.5 million upon the realization of certain tax losses. U.S. dollar figures are converted from Canadians dollar at current exchange rates.
Paul Walters, chairman and chief executive officer of Sears Canada, said Monday the deal could add as much as $186 million a year to Sears’ top line.
Under terms of the transaction, the purchase includes all outstanding common shares of Eaton’s; Eaton’s name, trademarks and web site, and eight store sites. The plan, Walters disclosed, is to operate the eight sites under the Sears banner.
Four of the acquired sites are Brentwood Mall, Burnaby, British Columbia; St. Vitale Centre, Winnipeg, Manitoba; Galeries la Capitale, Quebec City, Quebec, and Halifax Shopping Centre, Halifax, Nova Scotia. Four other sites are in Ontario: Westmount Shopping Centre, London; Sherway Gardens, Etobicoke; Yorkdale Shopping Centre, North York, and Scarborough Town Centre, Scarborough.
Two of Eaton’s Ontario sites, in Scarborough and York, and the Halifax location are substantially larger than Sears’ existing stores in those areas. Sears will keep its stores open until the renovations are completed and then relocate its employees to the newer stores. Eaton’s former employees will be eligible for the additional jobs created by the larger store format. Apparel and cosmetics will receive more floor space in the new stores, which are set to open in mid-2000, the ceo disclosed. The remaining five sites will be open in time for holiday 1999 under the Sears banner.
Sears, which is majority-owned by U.S. retailer Sears, Roebuck, has the option to pick up five more locations. That option expires Sept. 29.
Walters said no decision had been made about Sears’ using the Eaton’s name in its brick-and-mortar operation, but noted that Sears might use its direct marketing expertise to build Eaton’s for online and catalog sales.
As reported, Toronto-based Eaton’s last month filed for protection under Canadian bankruptcy law. The 130-year-old chain began liquidating at the end of last month. About 13,000 employees were affected.
Eaton’s will continue to find buyers for its assets that are not included in the Sears deal, including the remaining 59 store sites. Two of those unpurchased locations are choice sites — the Eaton Centre in downtown Toronto and the downtown store in Montreal, according to analysts.
Eaton’s was to have filed by the end of the month a plan of reorganization. It filed a motion Friday requesting another 45 days. If granted, Eaton’s wouldn’t have to file its repayment plan until early November. Among Eaton’s creditors are Tommy Hilfiger, Jones New York, Polo Ralph Lauren, Parfums Christian Dior Canada Inc., Lancome Canada and Shiseido Canada Inc.