Kmart and Sears Roebuck to merge

Discount American retailer Kmart Holding is combining with US department store chain Sears Roebuck in a £6 billion deal that will create the third- largest retailer in the United States after Wal-Mart and Target.

In a joint announcement, Kmart and Sears informed they signed a definite agreement to merge the two companies into a new group by the name of Sears Holdings Corporation, which will be based in Sears's headquarters in Hoffman Estates. The new company will have combined sales of $55 bn (€42.2 bn) and more than 3,450 stores, including 2,350 full-line stores and 1,100 speciality stores.

The companies believe that synergy in certain areas such as buying, marketing and supply chain management will cut costs of up to $500 million by the end of the third year following the merger, which is expected to be complete at the end of March 2005.

Kmart shareholders will receive one share of the new company for every Kmart share. Sears shareholders can sell one Sears share for $50 per Sears, or half a share of the new holding.