Kmart Holding Corp and Sears, Roebuck and Co on Thursday sealed their merger, creating the third-largest US retailer, which executives hope can compete with sector titan Wal-Mart.
The merger creates a new entity, with US$55 billion in annual sales and 3,800 stores.
Kmart and Sears shareholders each approved the combination at their special shareholder meetings held earlier in the day.
"This new enterprise will seek to leverage the combined strengths of Sears and Kmart to create greater long-term value than either could have generated on a stand-alone basis," said Edward Lampert, the former Kmart chairman who takes that title at the newly formed Sears Holdings.
"Sears Holdings plans to offer customers a new, more compelling shopping experience with a differentiated and expanded product range. We believe Sears Holdings has the potential to be a great company with a truly great retail business," he said.
"This is a very powerful merger economically," added Alan Lacy, who had been chairman at Sears and becomes vice chairman and chief executive of the new firm.
The new deal marks a major shake-up in the battered US retail industry and the end of an era at Sears, whose history goes back to 1886.
The deal was structured as a Kmart acquisition of Sears, in a transaction valued at US$12.3 billion, but the new firm will be known as Sears Holding Corp. The new firm will trade under the ticker symbol "SHLD."
It is expected to convert at least 400 Kmart locations to Sears stores, operating under the name Sears Essentials. The move will expand the company's presence in "off-mall" formats amid years of declining shopping-center traffic as buyers came to favor stand-alone stores such as Wal-Mart, Home Depot and Target.
The deal also allows for cross-selling of the companies' proprietary brands. The combined retailer will be able to offer Kmart exclusive merchandise in Sears stores.
George O'Hare, vice president of the National Association of Retired Sears Employees, voiced concerns over what the deal would mean to shareholders, calling it "a continuation of betrayal of trust by people in management."
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