Vintage Lampert, buying shares of a company he offer to buy for less than he offered two years ago…patience..
From the National Post
Sears Holdings Corp. (SHLD) continues to add to its nearly 73% stake in Sears Canada Inc. The U.S. retailing giant bought 29,600 shares of its Canadian subsidiary for around $17.85 per share between March 9 and March 10, 2009. This brought SHLD Acqusition Corp.’s holdings in the Canadian retailer to 20,756,173 shares. The transactions follow Sears Holdings Corp.’s purchase of 32,000 shares on Dec. 1, 2008.
In November 2006, Sears Canada shareholders rejected an $888-million bid by its parent after some investors said the $17.97 per share takeover price was too low. However, the potential deal sent Sears Canada shares nearly 50% higher since the offer was made to almost $30 per share.
Now follow this. As of 1/31, Sears Canada (SCC) had 107 million shares out and $891 million in cash on the books or, $8.32 a share. So, Lampert pays $17 a share, and then gets to add the $8.32 a share to Sears Holdings cash balance because of his ownership percentage for a nice 52% return. Beautiful…
Disclosure (“none” means no position):Long SHLD, none
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11 replies on “Sears Holdings Buys More Sears Canada Shares”
patience is a virtue…
you may want to change that 50% return because Sears Canada has always been consolidated on SHLD books proportionate to its ownership.
for example SHLD owned 70% on Dec 31, 2008 so it included in its balance sheet 70% of the cash in SCC already. the $8 you talk about is not new to SHLD balance sheet
Now that it added another 3% then it will add another 3% of $900 rather what you calculated to be $8 or 50% return on the purchase price.
right, i just broke it down to a per share level. the $8 i talk about is the additional $$ from recent purchases
Doesn’t SHLD already reflect 100% of Sears Canada’s cash balance on their balance sheet? I thought they only represented the proportional interest when their stake was in the 20-50% range.
From the 10-K: “The consolidated financial statements include all majority-owned subsidiaries in which Holdings exercises control.”
I agree with your calculations in economic terms, but it doesn’t add to their cash balance from an accounting perspective, right?
no, they only reported $700million + on the last 8-k as cash “held at sears canada”
http://idea.sec.gov/Archives/edgar/data/1310067/000119312509038135/dex991.htm
Does that mean that SHLD reports more than their 73% share of the Sears Canada cash balance?
If Sears Canada had $891 million in cash as of 1/31, that means that SHLD reported 88% of Sears Canada’s cash on their consolidated balance sheet ($787 million/$891 million).
What am I missing here?
currency valuation differences..the $891 million C is actually more than that in $$
got it. thought it might be exchange rates but it looked like you were denoting in USD. thanks.
Todd – my gosh, don’t you know that by buying those shares he also acquired LIABILITIES?
It’s not like he just got cash in the deal…holy cow, you are misleading people.
anon
assets > liabilities = net gain..
Cash = $833; total assets = 2271. Liabilities = 1756. 107 diluted shares outstanding.
When he paid $17 per share, he got: $7.78 per share in cash; $21 in total assets (including the cash); and also he got $16 of liabilities. Cash net of liabilities received in the deal was -$9 ($7.8-$16).
The 52% or whatever return number is wrong-or if not wrong, “optimistic”.