Esl Acquisition of Sears and Kmart

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  • Topic: Finance, Investor
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  • Published : February 12, 2013
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ESL’s
 Acquisi,on
 of
 Kmart
 and
 Sears
 

Who
 knows?
 

Which
 one
 of
 the
 retailers
 had
 the
  greatest
 revenues
 in
 1987?
 

6/12/12
 

ESL’s
 Acquisi,on
 of
 Kmart
 and
 Sears
 

2
 

Agenda
 

1 2 3 4 5

Introduc5on
 Kmart,
 Sears,
 ESL
  Strategic
 vs.
 Financial
 buyer
  ESL’s
 Acquisi,on
 of
 Kmart
 
  From
 Kmart
 to
 Sears
  Results
 and
 Conclusion
 

6/12/12
 

ESL’s
 Acquisi,on
 of
 Kmart
 and
 Sears
 

3
 

Company
 introduc,on:
 Kmart,
 Sears,
 ESL
 

 

Kmart
 
 (2011
 revenue:
 $15.5bn)
 
1.  Discount
 Retail
 chain,
 household
 items,
  clothing,
 and
 foods,
 founded
 in
 1962
  2.  Filed
 for
 Chapter
 11
 in
 2002
 

Sears
 (2011
 revenue:
 $21.6bn)
 
 
 

1.  Retail
 chain
 of
 department
 stores,
 
 founded
  in
 1893
  2.  Offers
 a
 wide
 range
 of
 home
 merchandise,
  apparel
  3.  Mainly
 operated
 in
 shopping
 malls
 

  ESL
 Investments
 
 
 
1.  Privately
 owned
 hedge
 fund
 founded
 by
 Eddie
 Lampert
  2.  Worth
 over
 $9
 billion
 in
 2004
  3.  Average
 returns
 of
 the
 fund
 is
 29%
 since
 1988
 

6/12/12
 

ESL’s
 Acquisi,on
 of
 Kmart
 and
 Sears
 

4
 

Agenda
 

1 2 3 4 5

Introduc,on
 Kmart,
 Sears,
 ESL
  Strategic
 vs.
 Financial
 buyer
  ESL’s
 Acquisi,on
 of
 Kmart
 
  From
 Kmart
 to
 Sears
  Results
 and
 Conclusion
 

6/12/12
 

ESL’s
 Acquisi,on
 of
 Kmart
 and
 Sears
 

5
 

Strategic
 vs.
 Financial
 Buyer
 

Strategic
 Buyer
 

Financial
 Buyer
 

1.  Is
 in
 the
 same
 or
 similar
 Line
 of
 Business
 in
  need
 of
 new
 products/services
  2.  Wants
 to
 buy
 and
 hold
  3.  Wants
 to
 build
 in
 post
 acquisi5on
 synergies
  4.  Slower
 growth
 model
 as
 investment
 horizon
  is
 
 long
 

1.  Is
 tradi,onally
 private
 equity
 group/LBOs
 and
  go
 for
 leverage
  2.  Wants
 to
 buy
 low
 and
 exit
 high
  3.  Typically
 does
 not
 care
 much
 about
  synergies
  4.  Looks
 for
 rapid
 growth
 due
 to
 focus
 on
 profit
  and
 exit
 

6/12/12
 

ESL’s
 Acquisi,on
 of
 Kmart
 and
 Sears
 

6
 

Agenda
 

1 2 3 4 5

Introduc,on
 Kmart,
 Sears,
 ESL
  Strategic
 vs.
 Financial
 buyer
  ESL’s
 acquisi5on
 of
 Kmart
 
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