Sears Holdings Mails Offer to Acquire Minority Shares of Sears Canada

Rejects Flawed Valuation Report

Sears Holdings Corporation (NASDAQ: SHLD) announced that it is mailing today its offer to acquire any and all of the outstanding common shares of Sears Canada Inc. (TSX: SCC), other than those already held by Sears Holdings and its affiliates, for C$16.86 per share in cash. Sears Holdings currently owns approximately 53.8% of the outstanding shares of Sears Canada. The offer is open for acceptance until 8:00 pm Eastern Standard Time on March 17, 2006.

"Our offer represents full and fair value for Sears Canada. We firmly believe that our offer provides the best alternative for all Sears Canada shareholders and that Sears Canada's current market price reflects unrealistic market expectations for a higher bid," said Alan Lacy, vice chairman of Sears Holdings. "Sears Canada faces an increasingly competitive retail environment as is evidenced by its disappointing financial and operating performance. Unless Sears Holdings owns 100% of Sears Canada, Sears Canada will continue to struggle to compete against large U.S. and Canadian retail competitors and to make the changes necessary to adapt to this increasingly competitive retail environment in Canada."

In its takeover bid circular, Sears Holdings outlines several compelling reasons why shareholders should accept the offer, including:

  -- The offer price represents a significant premium to historical prices
     and implies a price-earnings multiple that is materially higher than
     Sears Canada's historical trading multiples

  -- Natcan Investment Management Inc., Sears Canada's largest minority
     shareholder with approximately 9% of the outstanding shares, has agreed
     to tender all of the shares of Sears Canada that it owns or controls
     for the offer price of C$16.86

  -- The shares can be expected to trade at a significant discount to the
     offer price if Sears Holdings is not successful in acquiring 100% of
     the shares

  -- There are few, if any, opportunities for shareholders to realize
     enhanced value for their shares other than through the offer because:

     - Sears Holdings intends to maintain majority control of Sears Canada
       for the foreseeable future
     - The conversion of Sears Canada to an income trust could have negative
       tax consequences to Sears Holdings and therefore Sears Holdings will
       not approve such a conversion
     - Sears Canada has completed the credit portfolio sale and distributed
       most of the related proceeds to shareholders
     - Transactions involving the real estate assets of Sears Canada are
       unlikely to produce any material value enhancement

While the offer is subject to customary conditions, it is not subject to a minimum tender condition. Sears Holdings will acquire any and all shares tendered to its offer prior to the expiration date.

In response to the announcement by Sears Holdings of its intention to make the offer, the Board of Directors of Sears Canada established an independent committee to supervise the preparation of an independent formal valuation of the shares of Sears Canada. As more fully described in its valuation report, Genuity Capital Markets is of the opinion that, as of February 7, 2006, the fair market value of the shares is in the range of C$19.00 to C$22.25 per share. The valuation report is included in its entirety in the takeover bid circular.

Sears Holdings believes that shareholders of Sears Canada should critically review the valuation report prepared by Genuity, and when assessing its relevance, should carefully consider the following factors:

  -- The Genuity valuation ignores the critical fact that Sears Canada does
     not own the Sears trademarks and tradenames in Canada, including the
     Sears name itself, and powerful brands including Kenmore, Craftsman,
     and DieHard. Instead, Genuity implicitly assumes that a third-party
     purchaser would continue, despite the contrary terms of the existing
     license agreement, to have access to the trademarks on a royalty-free
     basis or, alternatively, would not require or place value on the

  -- Genuity places no weight on the arm's length offer price of C$16.86
     negotiated between Sears Holdings and Natcan, which holds approximately
     9% of the outstanding Sears Canada shares.  Further, the valuation
     range does not even include this negotiated price

  -- Genuity correctly suggests that the most relevant precedent transaction
     is the acquisition of Hudson's Bay Company, but then materially
     overstates the implied transaction multiple by not adjusting the
     multiple downward to reflect the recent sale of HBC's credit card

  -- Genuity overstates the "excess cash" position of Sears Canada by
     failing to recognize that the year-end figures represent the seasonal
     high cash position for the business and that there are significant cash
     requirements associated with ongoing retail operations

  -- Genuity's financial projections assume, without adequate explanation or
     support, the immediate reversal of long-term declining sales and
     margins trends in the face of an increasingly competitive environment

  -- Genuity assumes that the appraised value of the joint venture real
     estate properties can be realized immediately and without any discount
     despite the fact that there are contractual restrictions on the sale of
     the properties and that there is a limited market for such joint
     venture interests. Further, Genuity has incorrectly assumed that
     sale-leaseback transactions for the owned real estate would yield
     significant value creation for Sears Canada

  -- Genuity assumes that an income trust conversion is possible without
     structural and tax implications although Sears Holdings, a U.S.
     corporation, holds a majority of the outstanding shares and could be
     subject to negative tax consequences as a result of such a conversion.
     Further, Genuity values the "hypothetical" trust at yields determined
     by reference to existing Canadian retail trusts that have much better
     business prospects than Sears Canada; and finally

  -- In forming its views as to fairness, Genuity fails to comment on the
     most relevant valuation metric for shareholders - the expected trading
     value of the common shares if Sears Holdings does not acquire 100% of
     the shares of Sears Canada.

Mr. Lacy added, "The work of the independent valuator does not take into account a number of factors that are critical to accurately valuing Sears Canada. As the valuator did not adequately account for these key elements, shareholders should reject its conclusions. We are confident that shareholders of Sears Canada will recognize that our offer is a full and fair price that provides immediate liquidity to all shareholders."

  Scotia Capital Inc. is acting as financial advisor to Sears Holdings.

  About Sears Holdings Corporation

Sears Holdings Corporation is the third largest broadline retailer in North America 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 Steward 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, with more than 14 million service calls made annually. For more information, visit Sears Holdings' website at .

SOURCE: Sears Holdings Corporation

CONTACT: MEDIA, U.S., Sears Holdings Public Relations, +1-847-286-8371,
or Canada, John Lute of Lute & Company, +1-416-929-5883; or INVESTORS, Scotia
Capital Inc., +1-416-945-4508

Web site:

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