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Mergers, Acquisitions, Alliances and Synergies Case Study

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Case Title:

Sears-Kmart Merger : The Potential Synergies

Publication Year : 2005

Authors: Shalini, D. Satish

Industry: Retailing

Region: USA

Case Code: MAA0033

Teaching Note: Not Available

Structured Assignment: Not Available


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Abstract:
Kmart demonstrated a remarkable emergence from bankruptcy when it announced its acquisition of another big US retailer, Sears for $11 billion in 2004. The merger deal was structured by its chairman – Edward Lampert, a 53% stakeholder in Kmart with 15% stake in Sears. The merger was expected to make Sears Holdings the third largest retail company in the US – after Wal-Mart and Home Depot apart from synergistic benefits worth $500 million in the form of cost savings and additional profits. However, analysts were skeptical about the potential benefits from the merger as both companies were struggling amidst fierce competition in the US retail industry, faced with declining sales and profitability.

Pedagogical Objectives:

  • To discuss the expected synergies and the probable challenges to be faced by the combined entity, Sears Holdings.

Keywords :  Sears;Mergers, Acquisitions, Alliances Case Study; Kmart; Sears Holdings; Lampert; Cross selling of brands; US retail industry; Mergers in retail industry; Sears-Kmart merger; Synergy; Strategic fit; Wal-Mart; Target; Competition in US retail industry; Kmart bankruptcy

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Case Study :
   INR 200 = USD ($)

Structured Assignment:
   INR 150 = USD ($)

Teaching Note :
   INR 400 = USD ($)
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