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Sears Holdings To Buy Out Sears Canada

12/05/2005 12:12:00 PM Eastern

Hoffman Estates, Ill. — Sears Holdings, which presently owns 54 percent of Sears Canada, is planning to buy the balance of outstanding shares of its northern namesake for $718.5 million in cash.

Following the transaction, which requires regulatory approval, the Canadian entity would become a wholly owned subsidiary of Sears Holdings.

In announcing the deal, Sears Holdings’ vice chairman Alan Lacy noted that “On a stand-alone basis, Sears Canada’s retail business faces an increasingly competitive retail environment in Canada, and the principal factor that will determine the value of this business is the prospects for its retail operations. We intend to maintain a controlling ownership interest in Sears Canada, but believe Sears Canada will have a much greater opportunity to succeed with the benefits that will come with 100 percent ownership.”

Lacy continued, “We expect to continue to operate Sears Canada as a retail business. Sears Canada has long been an important part of the retail landscape in Canada and, with our shared brand name, is strategic to Sears Holdings. With the benefits that will accrue from 100 percent ownership, we believe we will be able to provide Sears Canada’s associates and customers with the opportunity to continue their relationship with this Canadian institution.”

Sears Holdings was formed last year when Kmart, led by chairman and financier Edward Lampert, acquired Sears for $11 billion. Observers say the combined entity has yet to fully realize the synergies, efficiencies and cross merchandising opportunities that were cited as reasons for the merger.