Sears announced a merger with Kmart. If you had some money in either stock, you are a little richer today. I have wondered for a while what would become of Kmart. The old "blue light" model no longer works, and they have faced stiff competition from Wal-Mart. The subtle change in the design of the stores and the new greenish colored logo just didn't seem like it was enough to help them turn the corner. I think a lot of people, myself included, are not really surprised that they are merging with someone.
But Sears? Well, Sears is another "old school" retailer that is going to have to change to be competitive in the post Wal-Mart environment. And there was an article in the Wall St. Journal on November 8th that might have given an alert investor a sign that something was afoot. The headline was "Vornado Realty Takes 4.3% Stake In Sears Roebuck" and reads in part:
In applauding the Vornado investment, Sears shareholders may be eyeing the success of Kmart Holding Corp. in selling off locations and amassing an enormous pile of cash....
Kmart and Sears have their largest shareholder in common: ESL Investments Inc., the Connecticut hedge fund run by Edward S. Lampert. But while ESL holds more than half of Kmart shares and Mr. Lampert serves as the discounter's chairman, he has not taken a public role in Sears....
An ESL spokesman declined to comment on Vornado's stake in Sears.
Don't feel bad, I missed it too. At least now we know what Kmart did with that pile of cash.
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