- The Washington Times - Thursday, March 24, 2005

HOFFMAN ESTATES, Ill. (AP) — Kmart Holding Corp. completed its $12.3 billion acquisition of Sears, Roebuck and Co. yesterday, creating the nation’s third-largest retailer with a projected $55 billion in annual sales.

Now comes the hard part: turning around two faded retail icons whose sales have been declining for years.

Shareholders approved the deal in separate meetings at Sears’ suburban Chicago headquarters, which now becomes the base for a company that adopts the name Sears Holdings Corp. It trails only Wal-Mart Stores Inc. and Home Depot Inc. among U.S. retailers.

The votes capped off the stunning proposal announced four months earlier by Kmart Chairman Edward Lampert, the billionaire hedge-fund manager who was the largest individual shareholder in each company.

Mr. Lampert, 42, who helped Troy, Mich.-based Kmart make a $1.1 billion profit last year with the aid of real estate transactions, denied he has a big sell-off in mind for Sears assets and said the new company “goes beyond being an investment.”

“It’s an opportunity to transform two companies that once were great — to transform them into a great company relative to the 21st century,” he said at a press conference after the meetings.

“I think there’s a presumption that you’re going to see a lot of store closings. That’s a wrong presumption,” he said. “Our program is to keep as many stores open as we can.”

Mr. Lampert complained he has been unfairly described as a sell-off specialist. He also denied the company has put the Lands’ End casual clothing chain on the market, as an industry publication reported earlier this month.

“Lands’ End isn’t for sale,” Mr. Lampert said. “It’s a great American brand, and I think it’s a brand that we could run very, very well.”

The merger brings together some other powerful brands that have succeeded while their parent companies’ retail results have sagged, among them Craftsman tools, Kenmore appliances and, from Kmart, Martha Stewart, Jaclyn Smith and Joe Boxer.

Employees have been concerned about widespread job cuts when the new company moves to close stores and convert hundreds of Kmart stores this year to the new Sears Essential convenience-oriented format. But officials said that while some layoffs will be announced by the end of April from among the 5,000 people working at the two headquarters, the vast majority of the work force of 400,000 will keep their jobs as Sears Holdings focuses on improving retail sales.

“We are determined to be successful,” Mr. Lampert said. “We will protect the assets of this company.”

The deal closed shortly after the back-to-back shareholder meetings — one tame, the other rancorous.

Sixty-nine percent of Kmart shareholders voted to approve the deal in results announced at a sparsely attended session lasting five minutes. About two hours later, CEO Alan Lacy disclosed that Sears shareholders also had voted 69 percent in favor of the deal — but he had to endure shouting and insults by retired and former Sears employees upset about the 119-year-old retailer’s acquisition by Kmart.

In a stock plunge Mr. Lacy attributed to “technical reasons” because of the previously agreed-upon price of $50 per share, Sears shares fell $6.76, or nearly 12 percent, to close at $50.04 on the New York Stock Exchange. Kmart shares rose $7.69, or 6.2 percent, to $132.52 on the Nasdaq Stock Market.

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