Sears plans to spin off big piece of Canada stake
(Reuters) - Sears Holdings Corp (SHLD.O: Quote) said on Thursday it plans to spin off a large part of its stake in its Canada unit, which Chairman Edward Lampert spent years trying to gain control of, to better focus on its U.S. business.
Separately, Sears Holdings reported a first-quarter adjusted operating loss that came in better than analysts' estimates but revenues fell from a year ago.
Sears Holdings owns about 95 percent of Sears Canada (SCC.TO: Quote) and would still hold about 51 percent after the spinoff, which it expects to complete this year. Sears said it could further reduce its Sears Canada stake after that.
The move follows efforts this year by Sears Holdings to cut costs by closing scores of stores and raise cash by selling prime real estate and spinning off its Sears Hometown and Outlet businesses and certain hardware stores.
Sears Canada and Sears Holdings said in separate statements the spinoff would allow each company to focus on its businesses, both of which are struggling with declining sales.
Two years ago, the company added to its stake in Sears Canada by buying 17.3 percent of the Canadian unit from hedge fund manager William Ackman's Pershing Square Capital Management.
Ackman and other minority investors had thwarted Sears Holdings' attempt in 2006 to buy the shares of Sears Canada it did not already own.
At the time that Sears bought out Ackman's stake, analysts praised the move, saying the cash-rich Canadian unit was a way to improve Sears Holdings' financial position.
But Sears Canada's fortunes have reversed course since then, and it has been a drag on overall results. Continued...