HOFFMAN ESTATES, IL-In the latest salvo in its bid to buy Sears Canada, Sears Holdings Corp. on Monday offered $18 per share through its wholly owned subsidiary, SHLD Acquisition Corp. The offer is for all outstanding common shares of Sears Canada, with Vornado Realty LP agreeing to deposit its 7.5 million shares toward the enhanced offer no later than Friday.
Along with boosting the price, SHLD has extended its offer until 11:59 p.m. Eastern Daylight Time on April 18. The extended offer also includes stipulations regarding the treatment of dividends under the new offer and other financial details.
With the Vornado shares, Sears Holdings and its affiliates will own 75.4 million common shares of Sears Canada, or more than 70% of the outstanding shares of the target company. Alan Lacy, vice chairman of Sears Holdings, commented that the combination of Vornado's shares and those of another large independent shareholder, Natcan Investment Management Inc., will help the company to swing the deal.
Monday's announcement by Sears Holdings is the latest in a series of maneuvers in that group's efforts to acquire Sears Canada Inc. Sears Holdings once was offering $16.86 per share in Canadian currency, an offer that came under fire by an outside evaluation firm called Genuity Capital Markets.
Sears Holding argued that the Genuity valuation ignored certain factors. For example, Lacy argued 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 said in his response to the Genuity valuation.
Meanwhile, in 2004 Vornado paid $337 million for shares of Sears, Roebuck & Co., and since that retailer's merger with Kmart forming SHLD, Vornado has realized an aggregate net gain on that investment last reported at $146.9 million. Vornado executives have said they plan to eventually sell their stake in the SHLD.
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