November’s historic announcement of the planned merger between two retailing icons captured the headlines of newspapers throughout the country. Together Sears and Kmart would create a major new retail company, Sears Holdings Corporation, with a national footprint of 3,500 retail stores and the leading service organization in the industry serving the needs of existing Kmart and Sears customers.

According to Alan Lacy, the merger will dramatically accelerate Sears’ off-mall growth strategy. “While we could continue to be successful on our own, the advantages of this combination in growing our store base more rapidly and at lower cost, and realizing the efficiencies that come from increased scale, allow us to thrive and grow at a pace that exceeds what could be accomplished by Sears on its own.”

Sears strong heritage and reputation is recognized in the name of the new corporation. Sears Holdings Corporation will continue to operate both Sears, Roebuck and Kmart nameplates from its headquarters in Hoffman Estates, Ill. The combined company will benefit customers by providing a greater choice of preferred brands, including Craftsman and Kenmore, Lands’ End, Apostrophe and Covington from Sears, and  Martha Stewart Everyday products and apparel brands Jaclyn Smith, Joe Boxer and Kathy Ireland from Kmart.

Under the terms of the agreement, Sears shareholders will have the right to elect $50 in cash or 0.5 shares of Sears Holdings for each Sears, Roebuck share, subject to proration (see Q & A, page 2). Following regulatory approval, both Sears and Kmart will hold special meetings of stockholders, most likely in March. Adoption of the merger requires approval by two-thirds of Sears shares and a majority of Kmart shares.

Lampert, Lacy and Lewis will be part of a 10-member board of directors that will govern the new Sears Holdings Corporation.

A transition team, made up of Sears and Kmart executives, has been charged with integration planning. Resulting projects will be launched following close of the merger.