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Kmart & Sears
 
Kmart-Sears Merger of 2005
Summary:
    In late 2004, Sears and Kmart announced that they would merge operations to form Sears Holding Company (SHC).  On the morning of the merger approval date, Sears’s shares fell $6.06 and Kmart shares raised $1.19.  The ultimate goal of the merger, according to E. Lampert, was to “seek to leverage the combined strengths of Sears and Kmart to obtain greater long-term value than either could have generated on a stand-alone basis.  SHC plans to offer customers a new, more compelling experience with a differentiated and expanded product range.”
    The new Board of Directors is a combination of seven directors of Kmart Board, and three director of Sears Board.  Their executive team is also a blend of Kmart and Sears staff members.  
    Both Kmart and Sears are giant retail corporations.  This merger makes SHC became the third larger retailer in the U.S.  Level competition is high, for example, there is Wal-Mart, Target, J.C. Penney, etc… because the mere combination of Sears and Kmart retail empires has not propose any significant threat to competitors.   Then, what caused that? And what can SHC do to maintain their image, their status and especially their business?
Analysis:
    According to Lampert, new chairman of SHC, SHC is using the Overall Cost Leadership for its new entity.  He believes that “the anticipated $200 million in additional revenue, the $30 million in cost savings, and Kmart’s $3.8 billion in tax credits…will help SHC…as a result, SHC should be able to accumulate cash and be in a strong market position.” His strong believe is based on several strategies, such as: the conversion of Kmart store ...
 
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