Kmart, Sears to Join Forces in $11 Bil. Deal

CHICAGO Kmart today said it would merge with Sears, Roebuck & Co. in an $11 billion deal that will create the nation’s third-largest retailer behind Wal-Mart and Target.

The joint company will be known as Sears Holdings Corp. but continue to operate Kmart and Sears stores under their current brand names. The new company will be headquartered in Hoffman Estates, Ill., where Sears has its headquarters, but will maintain a “significant presence” in Troy, Mich., where Kmart is based, per the companies.

The merger is expected to close by late March 2005, subject to approval by Kmart and Sears shareholders and government regulatory approvals.

Marketing plans going forward were not disclosed. Sears spent about $770 million on U.S. measured media last year, per Nielsen Monitor-Plus. Its key agency partners are Ogilvy & Mather and Young & Rubicam in Chicago and MindShare in New York, all WPP Group shops. Kmart spent nearly $150 million on ads last year, per NMP, working with Grey Global Group’s Grey and MediaCom, both in New York. WPP is in the process of acquiring Grey Global.

The deal will create a company with $55 billion in annual revenue, 2,350 full-line and off-mall stores, and 1,100 specialty retail locations.

Kmart chairman Edward Lampert will be the chairman of Sears Holdings, while Sears CEO Alan Lacy will be vice chairman and CEO of the new company. The new 10-member Sears Holdings board will have seven members from Kmart and three from Sears.

“The merger will enable us to manage the businesses of Sears and Kmart to produce a higher return than either company could achieve on its own,” Lampert said in a statement.

—Brandweek staff report

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