EXHIBIT 99.1
NEWS MEDIA CONTACTS:
U.S.:
Sears Holdings Public Relations
(847) 286-8371
Canada:
John Lute, Lute & Company
(416) 929-5883
INVESTOR CONTACT:
Scotia Capital Inc.
(416) 945-4508
FOR IMMEDIATE RELEASE:
February 9, 2006
SEARS HOLDINGS MAILS OFFER TO ACQUIRE
MINORITY SHARES OF SEARS CANADA
REJECTS FLAWED VALUATION REPORT
HOFFMAN ESTATES, Ill., -- Sears Holdings Corporation (NASDAQ: SHLD) announced
that it is mailing today its offer to acquire any and all of the outstanding
common shares of Sears Canada Inc. (TSX: SCC), other than those already held by
Sears Holdings and its affiliates, for C$16.86 per share in cash. Sears Holdings
currently owns approximately 53.8% of the outstanding shares of Sears Canada.
The offer is open for acceptance until 8:00 pm Eastern Standard Time on March
17, 2006.
"Our offer represents full and fair value for Sears Canada. We firmly believe
that our offer provides the best alternative for all Sears Canada shareholders
and that Sears Canada's current market price reflects unrealistic market
expectations for a higher bid," said Alan Lacy, vice chairman of Sears Holdings.
"Sears Canada faces an increasingly competitive retail environment as is
evidenced by its disappointing financial and operating performance. Unless Sears
Holdings owns 100% of Sears Canada, Sears Canada will continue to struggle to
compete against large U.S. and Canadian retail competitors and to make the
changes necessary to adapt to this increasingly competitive retail environment
in Canada."
In its takeover bid circular, Sears Holdings outlines several compelling reasons
why shareholders should accept the offer, including:
|-| The offer price represents a significant premium to historical prices
and implies a price-earnings multiple that is materially higher than
Sears Canada's historical trading multiples
|-| Natcan Investment Management Inc., Sears Canada's largest minority
shareholder with approximately 9% of the outstanding shares, has agreed
to tender all of the shares of Sears Canada that it owns or controls for
the offer price of C$16.86
|-| The shares can be expected to trade at a significant discount to the
offer price if Sears Holdings is not successful in acquiring 100% of the
shares
|-| There are few, if any, opportunities for shareholders to realize enhanced
value for their shares other than through the offer because:
|-| Sears Holdings intends to maintain majority control of Sears Canada
for the foreseeable future
|-| The conversion of Sears Canada to an income trust could have
negative tax consequences to Sears Holdings and therefore Sears
Holdings will not approve such a conversion
|-| Sears Canada has completed the credit portfolio sale and
distributed most of the related proceeds to shareholders
|-| Transactions involving the real estate assets of Sears Canada are
unlikely to produce any material value enhancement
While the offer is subject to customary conditions, it is not subject to a
minimum tender condition. Sears Holdings will acquire any and all shares
tendered to its offer prior to the expiration date.
In response to the announcement by Sears Holdings of its intention to make the
offer, the Board of Directors of Sears Canada established an independent
committee to supervise the preparation of an independent formal valuation of the
shares of Sears Canada. As more fully described in its valuation report, Genuity
Capital Markets is of the opinion that, as of February 7, 2006, the fair market
value of the shares is in the range of C$19.00 to C$22.25 per share. The
valuation report is included in its entirety in the takeover bid circular.
Sears Holdings believes that shareholders of Sears Canada should critically
review the valuation report prepared by Genuity, and when assessing its
relevance, should carefully consider the following factors:
|-| The Genuity valuation ignores the critical fact that Sears Canada does not
own the Sears trademarks and tradenames in Canada, including the Sears name
itself, and powerful brands including Kenmore, Craftsman, and DieHard.
Instead,Genuity implicitly assumes that a third-party purchaser would
continue, despite the contrary terms of the existing license agreement, to
have access to the trademarks on a royalty-free basis or, alternatively,
would not require or place value on the trademarks
|-| Genuity places no weight on the arm's length offer price of C$16.86
negotiated between Sears Holdings and Natcan, which holds approximately 9%
of the outstanding Sears Canada shares. Further, the valuation range does
not even include this negotiated price
|-| Genuity correctly suggests that the most relevant precedent transaction is
the acquisition of Hudson's Bay Company, but then materially overstates
the implied transaction multiple by not adjusting the multiple downward to
reflect the recent sale of HBC's credit card portfolio
|-| Genuity overstates the "excess cash" position of Sears Canada by failing
to recognize that the year-end figures represent the seasonal high cash
position for the business and that there are significant cash requirements
associated with ongoing retail operations
|-| Genuity's financial projections assume, without adequate explanation or
support, the immediate reversal of long-term declining sales and margins
trends in the face of an increasingly competitive environment
|-| Genuity assumes that the appraised value of the joint venture real estate
properties can be realized immediately and without any discount despite
the fact that there are contractual restrictions on the sale of the
properties and that there is a limited market for such joint venture
interests. Further, Genuity has incorrectly assumed that sale-leaseback
transactions for the owned real estate would yield significant value
creation for Sears Canada
|-| Genuity assumes that an income trust conversion is possible without
structural and tax implications although Sears Holdings, a U.S.
corporation, holds a majority of the outstanding shares and could be
subject to negative tax consequences as a result of such a conversion.
Further, Genuity values the "hypothetical" trust at yields determined by
reference to existing Canadian retail trusts that have much better
business prospects than Sears Canada; and finally
|-| In forming its views as to fairness, Genuity fails to comment on the most
relevant valuation metric for shareholders - the expected trading value of
the common shares if Sears Holdings does not acquire 100% of the shares
of Sears Canada.
Mr. Lacy added, "The work of the independent valuator does not take into account
a number of factors that are critical to accurately valuing Sears Canada. As the
valuator did not adequately account for these key elements, shareholders should
reject its conclusions. We are confident that shareholders of Sears Canada will
recognize that our offer is a full and fair price that provides immediate
liquidity to all shareholders."
Scotia Capital Inc. is acting as financial advisor to Sears Holdings.
ABOUT SEARS HOLDINGS CORPORATION
Sears Holdings Corporation is the third largest
broadline retailer in North America with approximately $55 billion in annual
revenues, and with approximately 3,900 full-line and specialty retail stores in
the United States and Canada. Sears Holdings is the leading home appliance
retailer as well as a leader in tools, lawn and garden, home electronics and
automotive repair and maintenance. Key proprietary brands include Kenmore,
Craftsman and DieHard, and a broad apparel offering, including such well-known
labels as Lands' End, Jaclyn Smith and Joe Boxer, as well as the Apostrophe and
Covington brands. It also has Martha Steward Everyday products, which are
offered exclusively in the U.S. by Kmart and in Canada by Sears Canada. The
company is the nation's largest provider of home services, with more than 14
million service calls made annually. For more information, visit Sears Holdings'
website at WWW.SEARSHOLDINGS.COM.