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Sears Sells Orchard Stake

HOFFMAN ESTATES, IL-Sears Holdings Corp. is selling off a 19.9% interest in its Orchard Supply Hardware Stores Corp. to a private equity fund.

By Dana Dubriwny | Updated on October 09, 2005

HOFFMAN ESTATES, IL-Sears Holdings Corp., the company formed by the merger of Sears and Kmart, has entered into an agreement to sell off a portion of its San Jose, CA-based Orchard Supply Hardware Stores Corp. Acres Management LLC, a private equity fund, will invest $58.7 million for a 19.9% interest in the company. The fund will also have a three-year option to purchase an additional 30.2% for $126.8 million.

William Crowley, executive vice president and chief financial and administrative officer of Sears Holdings says the purchase agreement will allow Sears to focus more of its management attention and capital on the company’s core business, namely its Sears and Kmart stores. Adding to the positive sentiment, David B. Kaplan, senior partner of Ares Management, said in a statement that the move would allow Acres to “assist the company in its expansion plans.”

Orchard Supply Hardware is expected to issue approximately $405 million in debt as it relates to the agreement. Sears Holdings also announced that it expects its wholly owned subsidiary Sears, Roebuck and Co. to receive a $450 million dividend from Orchard.

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