Sears Holdings Corporation (NASDAQ: SHLD) announced that it is mailing its Notice of Variation and Change to shareholders of Sears Canada today.
As described in greater detail in the Notice of Variation and Change, shareholders who deposit their shares to the revised C$18.00 per share offer will receive cash within 10 calendar days of the deposit. Any shares deposited on or after April 17, will be promptly taken up and paid for by SHLD Acquisition Corp.
The decision by holders of a majority of the minority of common shares of Sears Canada to support a transaction at C$18.00 per share is the result of independent decisions by experienced, well-informed, and significant shareholders of Sears Canada. First, Natcan Investment Management, the largest shareholder other than Sears Holdings, agreed to tender its 9 million shares in December of 2005 at the initial offer price of C$16.86.
Second, on April 1, 2006, Vornado Realty Trust, the second largest minority shareholder after Natcan, agreed to tender 7.5 million shares at a revised price of C$18.00. As part of this agreement, SHLD Acquisition Corp. agreed to pay all shareholders the highest price paid to any shareholder at any time until the earlier of December 31, 2008 or such time as SHLD Acquisition Corp. owns, directly or indirectly, 100% of the Sears Canada shares. As required by the Canadian securities laws and as fully disclosed in the Notice of Variation and Change mailed on Tuesday, April 4, 2006, this protection is provided to all Sears Canada shareholders. Further, consistent with obligations under the Canadian and U.S. securities laws, neither SHLD Acquisition Corp. nor Sears Holdings, is providing any consideration to Vornado that it is not providing to all other Sears Canada shareholders.
Third, the agreements among Sears Holdings and certain shareholders of Sears Canada in which they committed to vote their shares in favor of a going- private transaction in December 2006 at C$18.00 were reached through arms- length negotiations with each of these shareholders. Again, Sears Holdings is not providing to these shareholders any consideration that it is not providing to all other Sears Canada shareholders.
As a result of the decisions to support the transaction by holders of over 25 million shares, which represent the majority of the shares not owned by Sears Holdings or its affiliates prior to the commencement of the offer, Sears Holdings has sufficient shares to assure a successful going-private transaction and ownership of 100% of the outstanding shares of Sears Canada in December 2006.
With respect to the disclosure by Pershing Square Capital Management, L.P. that funds managed by it are entitled to a total economic interest equal to 11.6% of the outstanding common shares of Sears Canada, we note that Pershing Square claims in its release to own only 5.6 million shares directly, all of which were purchased since the mailing of our offer on February 9, 2006. It is disingenuous, at best, for Pershing Square to purchase shares in the market at or around C$18.00 per share and then turn around and say that a purchase by Sears Holdings at a comparable price is unfair or that their "reasonable expectations [were] frustrated." Here, Pershing Square used "cash-settled derivative transactions" which it believes avoid the disclosure obligations that otherwise would apply to direct ownership pursuant to Section 102 of the Securities Act (Ontario). During the period in which Pershing Square was purchasing these shares, Pershing Square did not publicly disclose that it had an economic interest in an additional 6.9 million shares.
Ultimately, we recognize that Pershing Square has the right to decide whether to tender or seek appraisal rights (as described in our Offer Circular) with regard to the shares that it in fact owns, but regardless of the actions by Pershing Square, Sears Holdings will own 100% of Sears Canada in December. While Pershing Square makes threats about various legal actions, we are confident that Sears Holdings has scrupulously followed the laws of Canada and the U.S. Importantly, the fact that several large and sophisticated shareholders independently decided to accept our offer is compelling evidence that our offer is fair and we believe that any pursuit of a higher price through the long and costly process of appraisal rights will be unsuccessful.
About Sears Holdings Corporation
Sears Holdings Corporation is the nation's third largest broadline retailer, with approximately $55 billion in annual revenues, and with approximately 3,900 full-line and specialty retail stores in the United States and Canada. Sears Holdings is the leading home appliance retailer as well as a leader in tools, lawn and garden, home electronics and automotive repair and maintenance. Key proprietary brands include Kenmore, Craftsman and DieHard, and a broad apparel offering, including such well-known labels as Lands' End, Jaclyn Smith and Joe Boxer, as well as the Apostrophe and Covington brands. It also has Martha Stewart Everyday products, which are offered exclusively in the U.S. by Kmart and in Canada by Sears Canada. The Company is the nation's largest provider of home services in the U.S., with more than 13 million service calls made annually. For more information, visit Sears Holdings' website at http://www.searsholdings.com/ .
SOURCE: Sears Holdings Corporation
CONTACT: Sears Holdings Public Relations, +1-847-286-8371