Dissident Sears Canada holders dispute valuation

Date: Wednesday, May 3, 2006
Author: Reuters

Pershing Square Capital Management, the hedge fund that has opposed Sears Holdings Corp.'s C$892 million plan to buy out Sears Canada Ltd , said on Wednesday that the bid significantly undervalues the stock.

Pershing, led by activist investor William Ackman, who has successfully lobbied for changes at companies, including Wendy's International Inc. , said it believes the stock is worth between C$41.21 and C$46.67 per share, more than double the C$18 per share Sears Holdings is paying.

In a statement e-mailed to Reuters, Pershing said its valuation reflected some C$301 million in cost savings at Sears Canada, which were not fully included in other such valuations.

Sears Holdings first offered to buy the remaining shares of Sears Canada for C$16.86 per share in December and then sweetened its bid to C$18.00 last month. The retailer has said it has the support of a majority of the minority shareholders and expects to complete the deal in December.

But Pershing and two other minority shareholders have vowed to fight the deal.

Sears Canada shares were up 17 Canadian cents at C$18.47 on the Toronto Stock Exchange on Wednesday afternoon.