New York City, Vornado Realty Trust announced it would back Kmart Holdings Corp. in its proposed acquisition of Sears Roebuck & Co. Vornado, currently holding 1.18 million shares of Sears stock and a derivative position for another 7.9 million shares, said it would elect to receive stock in the new merger.
Paramus, N.J.-based Vornado raised eyebrows in the investment community last November when, shortly before the proposed acquisition was announced, it revealed that it had boosted its holdings in Sears to 4.3%. The announcement triggered speculation that Vornado was planning to redevelop some of Sears’ real estate, much of which is leased at below-market rates.
Sears’ shares have consistently traded higher since the merger was announced in November on the hopes that Vornado might team with a rival retailer to make a competing bid. Any spoiler would be forced to absorb $400 million in break-up fees, part of the Sears-Kmart agreement.