Vornado Backs Kmart-Sears

PARAMUS, NJ-Vornado Realty Trust executives released a statement yesterday saying that they will support the proposed $13 billion merger between Kmart Holding Corp. and Sears, Roebuck & Co. In November, Vornado bought a 4.3% stake in Sears, just a couple of weeks before its merger with Kmart was announced. The REIT currently owns nearly 1.2 million shares of Sears’ stock and will elect to receive stock of the merged company as compensation.

Vornado is also involved in its own transaction, having agreed last week to acquire Toys ‘R’ Us in an $8.6 billion deal with Bain Capital and Kohlberg, Kravis, Roberts & Co. A Bear Stearns report issued yesterday on that deal says, “The challenge, of course, will be to fix an ailing retailer in a competitive environment, while at the same time realizing the underlying value of [Toys 'R' Us] real estate. The assets are generally acknowledged to be pretty good, and the exercise should play to [Vornado's] strengths.”