Sears Lands Lands' End

Sears, Roebuck and Co. (Hoffman Estates, Ill.) has entered into a definitive agreement to acquire Lands'End Inc. (Dodgeville, Wis.) in a cash tender offer for $62 per Lands'End share, or approximately $1.9 billion.

Upon completion of the transaction, expected in June, Lands'End will become a wholly owned subsidiary of Sears, though continuing to be headquartered in Dodgeville.

Lands'End founder and chairman Gary Comer and certain other Lands'End shareholders have agreed to tender their shares, representing approximately 55 percent of the outstanding common stock. The offer requires that at least two-thirds of the shares be tendered. The transaction has been approved by both companies'boards of directors.

Sears will introduce a selection of Lands'End products into many of its 870 full-line stores by fall 2002, and is expected to complete product rollout to stores by fall 2003. Lands'End will continue to offer its complete product line direct to customers through its catalogs and web site.

Alan Lacy, Sears chairman and ceo, said the opportunity to be the exclusive retail distributor of Lands'End merchandise is significant to the Sears'overall apparel strategy. He says Lands'End and Covington, Sears'new proprietary classic apparel line launching this fall, will be the foundation of the company's proprietary apparel offerings.

“Lands'End is a very successful and well-managed company,” Lacy said. “We were drawn to its brand strength across all apparel categories.”

“Today's transaction allows us to increase the market penetration of the Lands'End brand through exclusive retail distribution in approximately 870 stores,” said Lands'End president and ceo David Dyer. “Strategically, we view retail distribution of our products as an important growth opportunity. We were considering the prospect of opening stores ourselves or seeking a strategic partner, and ultimately decided that our alliance with Sears offered the most exciting opportunity.”

Dyer will continue to lead the Lands'End business, reporting to Lacy after the transaction closes. Dyer also will assume responsibility for Sears'existing customer-direct business, which includes the Sears web site, catalogs and specialty merchandise.

On a separate occasion, Sears'Lacy told shareholders his company would be interested in carrying the Martha Stewart brand in its stores if she ever ended her exclusive relationship with Kmart.

“She has a strong brand, and we would like to explore opportunities,” Lacy said at the company's annual meeting, responding to a question from a shareholder. Retail observers have been wondering about the future of the Martha Stewart-Kmart relationship since the retailer's Chapter 11 bankruptcy filing in January. A spokeswoman for Martha Stewart Living Omnimedia (New York) told Crain's Chicago Business she was unavailable for comment.