Subject category:
Strategy and General Management
Published by:
IBS Case Development Center
Length: 21 pages
Data source: Published sources
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https://casecent.re/p/62276
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Abstract
Kmart demonstrated a remarkable emergence from bankruptcy when it announced its acquisition of another big US retailer, Sears, for $11 billion in 2004. The merger deal was structured by its Chairman - Edward Lampert, a 53% stakeholder in Kmart with a 15% stake in Sears. The merger was expected to make Sears Holdings the third largest retail company in the US - after Wal-Mart and Home Depot apart from synergistic benefits worth $500 million in the form of cost savings and additional profits. However, analysts were sceptical about the potential benefits from the merger as both companies were struggling amidst fierce competition in the US retail industry, faced with declining sales and profitability. The case study provides the scope to discuss the expected synergies and the probable challenges to be faced by the combined entity, Sears Holdings.
About
Abstract
Kmart demonstrated a remarkable emergence from bankruptcy when it announced its acquisition of another big US retailer, Sears, for $11 billion in 2004. The merger deal was structured by its Chairman - Edward Lampert, a 53% stakeholder in Kmart with a 15% stake in Sears. The merger was expected to make Sears Holdings the third largest retail company in the US - after Wal-Mart and Home Depot apart from synergistic benefits worth $500 million in the form of cost savings and additional profits. However, analysts were sceptical about the potential benefits from the merger as both companies were struggling amidst fierce competition in the US retail industry, faced with declining sales and profitability. The case study provides the scope to discuss the expected synergies and the probable challenges to be faced by the combined entity, Sears Holdings.