Sears Holdings Corporation's wholly-owned subsidiary SHLD Acquisition Corp. has taken up 10,161,968 common shares of Sears Canada pursuant to its take-over bid, representing approximately 9.5% of Sears Canada's outstanding shares. As a result, Sears Holdings now owns approximately 63.2% of the outstanding shares of Sears Canada.
In addition, SHLD Acquisition Corp. has extended its offer to 8:00 p.m. (Eastern Standard Time) on March 31, 2006 to allow Sears Canada shareholders a further opportunity to deposit their common shares to the offer. Sears Holdings will acquire any and all shares validly tendered to its offer prior to the extended expiry time. A formal notice of the extension of the offer will be mailed to Sears Canada's shareholders.
Alan Lacy, vice chairman of Sears Holdings, commented, “We are extending our offer to provide shareholders with a continued opportunity to tender to our C$16.86 offer which we believe represents a full and fair price. Unless shares that, when combined with the shares already tendered, represent a majority of the minority agree to support our transaction, we do not intend to extend our offer again.”
As a result of the announcement by six independent directors not to stand for re-election at the forthcoming annual meeting of Sears Canada, Sears Holdings has initiated a search for new independent directors. Sears Holdings plans to nominate and elect three suitably qualified independent directors to replace the current independent directors who will not be serving beyond the next annual meeting. Sears Holdings will also seek to nominate and elect other directors who are either Sears Holdings or Sears Canada employees. Given its majority ownership of Sears Canada, Sears Holdings believes it is appropriate that a majority of the directors of the new board of Sears Canada be employees of either Sears Holdings or Sears Canada.
In the event that Sears Holdings does not acquire a majority of the minority of Sears Canada, Sears Canada will face the increasingly competitive Canadian retail environment without the financial and operating benefits of being owned 100% by Sears Holdings. Therefore, Sears Holdings, consistent with its practice in the United States, will support the elimination of the recent practice of Sears Canada of paying quarterly dividends of C$0.06. In addition, Sears Holdings would not support any extraordinary dividend or distribution to public shareholders in 2006.
