Restoration Hardware Rebuffs Sears

Restoration Hardware Inc. (Corte Madera, Calif.) has ended merger discussions with Sears Holdings Corp. (Hoffman Estates, Ill.) and will proceed with plans for an acquisition by Catterton Partners Corp. (Greenwich, Conn.).

The specialty housewares retailer said an exploratory “go-shop” period conducted by a committee of independent directors had expired on Feb. 28, 2008, without a meaningful Sears bid. During the period, Restoration Hardware was permitted to initiate, solicit and encourage alternative proposals. It said that, despite numerous efforts to engage with Sears during the process, the department store giant did not submit a proposal until the final day.

Restoration Hardware said that after several discussions with representatives of Sears, the independent committee determined that its current proposal “was not reasonably likely to result in a superior proposal under the terms of the agreement and plan of merger.”

Sears had made a bid for Restoration Hardware, valued at about $267 million, in November 2007. In January 2008, Catterton – a private equity investor – entered the picture and the two parties signed an amended merger agreement.