Sears Holdings Looks to Acquire Sears Canada…

Sears Holdings Corporation is proposing to acquire all of the outstanding common shares of Sears Canada Inc., other than those already held by Sears Holdings and its affiliates, for CN$16.86 per common share in cash, after the distribution to shareholders of the CN$18.64 per share distribution announced previously by the Board of Directors of Sears Canada.

The offer represents a 22.2% premium over the average closing price since August 31, 2005, the date that Sears Canada announced it had entered into an agreement to sell its Credit and Financial Services business.

Sears Holdings currently owns 57,732,517 common shares or approximately 53.8% of the outstanding common shares of Sears Canada. The aggregate consideration payable under the proposal for 46.2% of Sears Canada shares that are not held by Sears Holdings would be approximately C$835.4 million (US$718.5 million).

Following the transaction, Sears Canada would become a wholly owned subsidiary of Sears Holdings.

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Teresa Hartford

Teresa Hartford Editorial & Creative Director | SGB Media teresa@sgbonline.com | 704.651.5741

Sears Holdings Looks to Acquire Sears Canada

Sears Holdings Corporation is proposing to acquire all of the outstanding common shares of Sears Canada Inc., other than those already held by Sears Holdings and its affiliates, for C$16.86 per common share in cash, after the distribution to shareholders of the C$18.64 per share distribution announced last Friday by the Board of Directors of Sears Canada. The offer represents a 8.7% premium over Friday's closing price and a 22.2% premium over the average closing price since August 31, 2005, the date that Sears Canada announced it had entered into an agreement to sell its Credit and Financial Services business, and is more than two times the closing price at the beginning of the year, in each case, adjusted for the C$18.64 distribution.

Sears Holdings currently owns 57,732,517 common shares or approximately 53.8% of the outstanding common shares of Sears Canada. The aggregate consideration payable under the proposal for 46.2% of Sears Canada shares that are not held by Sears Holdings would be approximately C$835.4 million (US$718.5 million). Following the transaction, Sears Canada would become a wholly owned subsidiary of Sears Holdings.

In announcing the offer, Alan Lacy, Vice Chairman of Sears Holdings, said: “The Sears Holdings proposal represents an excellent opportunity for Sears Canada shareholders to realize a premium and liquidity for their shares. On a stand-alone basis, Sears Canada's retail business faces an increasingly competitive retail environment in Canada, and the principal factor that will determine the value of this business is the prospects for its retail operations. We intend to maintain a controlling ownership interest in Sears Canada, but believe Sears Canada will have a much greater opportunity to succeed with the benefits that will come with 100% ownership.”

Mr. Lacy added, “We expect to continue to operate Sears Canada as a retail business. Sears Canada has long been an important part of the retail landscape in Canada and, with our shared brand name, is strategic to Sears Holdings. With the benefits that will accrue from 100% ownership, we believe we will be able to provide Sears Canada's associates and customers with the opportunity to continue their relationship with this Canadian institution.”

Sears Holdings also announced that it has entered into a lock-up agreement with Natcan Investment Management, Inc., (“Natcan”) which has agreed to tender all 9,699,862 common shares that it owns or controls in response to Sears Holdings' offer, or approximately 9.06% of the outstanding common shares of Sears Canada.

The Sears Holdings offer will be subject to customary conditions, including the tender by holders of a majority of the Sears Canada common shares not already owned by Sears Holdings and its affiliates on a fully diluted basis.

Sears Holdings has requested that Sears Canada establish an independent committee of the Sears Canada board of directors to supervise the preparation of a formal valuation and review and make a recommendation with respect to the offer. Following completion of the valuation, Sears Holdings expects to send its offer to the shareholders of Sears Canada and to make all necessary filings with the appropriate securities regulatory authorities.

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