Et tu Steven Roth?

Discussion
Dec 07, 2004
George Anderson

By George Anderson


When Steven Roth’s Vornado Realty Trust took a 4.3 percent stake in Sears last month, Deutsche Bank’s senior real estate analyst Louis Taylor suggested Sears’ largest shareholder and Kmart’s Chairman, Edward Lampert, brought Mr. Roth and Vornado in to help push a sale of the chain’s real estate or possibly divest it with the intention of leasing it back.


The thinking of Mr. Taylor and others at the time (remember that the Kmart-Sears merger had not yet been announced) was that Messrs. Roth and Lampert were on the same page.


A new report in Chicago’s Sun-Times newspaper now suggests that the two men may be at odds over what do with Sears.


Jonathan Litt, senior real estate analyst at Citigroup Smith Barney, believes Vornado may be looking to put the kibosh on the Sears-Kmart merger with a bid of its own for Sears.


Mr. Litt speculates that Vornado may team up with another private equity partner or retailer to make a separate bid of its own. Its other option may be to work out a deal with Sears to exchange the rights to sell stores in return for Vornado’s holdings in the retailer.


George Whalin, president of Retail Management Consultants, said, “Sears is going to move off mall, so this becomes a real estate play on getting rid of the [870] mall-based stores.”


Moderator’s Comment: What do you think about a possible competing bid by Vornado or a dark horse investor for Sears? Do you see a scenario where the
Kmart-Sears merger might be scuttled?


We’ll let others chime in first on this but we do agree with George Whalin. “This could be really fun to watch.”
George Anderson – Moderator

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