Report Challenges Sears Offer

Sears Holdings already owns approximately 54% of the outstanding shares of Sears Canada and says that its offer to buy the remaining shares will be good until March 17. "Our offer represents full and fair value for Sears Canada. We firmly believe that our offer provides the best alternative for all Sears Canada shareholders and that Sears Canada's current market price reflects unrealistic market expectations for a higher bid," says Alan Lacy, vice chairman of Sears Holdings.

Lacy argues that Sears Canada "faces an increasingly competitive retail environment" that's reflected in the Canadian company's "disappointing financial and operating performance." Sears Canada "will continue to struggle to compete against large US and Canadian retail competitors" if it doesn't sell to Sears Holdings, Lacy says.

But the Genuity Capital Markets valuation says that Sears Canada is worth more than Sears Holdings is offering. It values the Canadian company at $19 to $22.25 per share in Canadian currency and says that minority shareholders, in particular, should not accept the Sears Holdings offer. An independent committee named by Sears Canada will be considering the Sears Holdings offer and expects to issue a directors' circular regarding the offer to the minority shareholders of Sears Canada within the next 10 days.

The reference to minority shareholders mentions Natcan Investment Management Inc. as Sears Canada's largest minority shareholder with approximately 9% of the outstanding shares. It says that Natcan has agreed to tender all of the shares of Sears Canada that it owns or controls for the offer price of $16.86.