Kmart Holding Corp. is buying Sears, Roebuck & Co., for $11 billion, a deal that will create the third-largest retailer in the U.S.
Kmart emerged from bankruptcy just 18 months ago and not long ago looked like a candidate for the dust bin, but Kmart has been generating strong profits in recent months while Sears continues to languish.
The startling acquisition was engineered by Kmart Chairman Edward Lampert, the largest single shareholder in Sears. He holds about 15% of Sears stock through his ESL Investments Inc.
The merger isn't the end of problems for Kmart and Sears, both struggling to combat Wal-Mart, Home Depot and other powerhouse retailers. But the combined company will have greater buying power and more outlets -- 2,350 Sears and Kmart locations and another 1,100 specialty stores.
"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.
The combined company will be called Sears Holdings Corp. and will be based in Hoffman Estates, Ill., where Searnow s has its headquarters.
It's expected that several hundred Kmart stores will be converted to Sears stores and Kmart stores will begin carrying private-label Sears products like Kenmore appliances and Craftsman tools.
Lampert will be the chairman of Sears Holdings, while Sears CEO Alan Lacy will be vice chairman and CEO.
