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Sears and Controversial Hedge Fund Managers

Date: Friday, September 29, 2006
Author: Alex Akesson, Hedgeco.net

HedgeCo.Net (New York) - Sears Holdings Corp, headed by hedge fund billionaire Edward Lampert, is trying to offer a controversial $908-million privatization bid for its subsidiary Sears Canada Inc.

Sears is planning “seek leave to appeal” the Ontario court decision that blocked the offer. Sears Holdings Corp. has also extended until Oct. 31 its $802 million offer to buy the 46 percent of Sears Canada Inc. it doesn’t already own, leaving the door open to more extensions.

Last month the Ontario Securities Commission found the Chicago based retailer violated provincial securities law by failing to disclose support agreements with the Bank of Nova Scotia and the Royal Bank of Canada.

Edward Lampert, is set to become chairman of the combined companies, Kmart and Sears. As Kmart’s chairman, he owns nearly 53 percent of its stock through his ESL Investments hedge fund. He is also the largest shareholder in Sears. ESL holds a 15 percent stake in the retailer.

Besides stakes in Kmart and Sears, Lampert’s fund also owns large positions in car dealer AutoNation and auto parts retailer AutoZone. He has built a reputation as a one of Wall Street’s most successful and renowned hedge fund managers.

Early last year he was kidnapped at gunpoint from a parking garage at ESL’s Greenwich, Conn., offices. Four captors held him for ransom, keeping him bound and blindfolded for some 30 hours before he negotiated his own release.

Alex Akesson
Contributing Writer
Email: Editor@hedgeco.net