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Sears Pursues Restoration Hardware

By proposing an all-cash bid of $6.75 per share in its acquisition move on home furnishings specialty retailer Restoration Hardware (RH), merchandising conglomerate Sears Holdings surpassed the approximately $260 million bid made Nov. 8 by investment firm Catterton Partners.

The Catterton offer (proposed through its Home Holdings entity) was set at $6.70 per share. Sears Holdings became the largest stockholder in RH with a recent purchase of 13.7% of voting shares.

In a filing with the Securities and Exchange Commission on Nov. 26, Sears amended its Nov. 19 filing to the effect of noting it had sent a Nov. 23 letter to RH proposing to make a cash offer of $6.75 per share and stating that its merger offer would include "a lower, more reasonable break-up fee" than that contained in the Catterton offer.

In negotiations that followed on Sunday, Nov. 25, the special committee of the RH board of directors rebuffed Sears' request to enter into a confidentiality agreement, the filing also noted. Sears had said in its letter to RH that it would need more than the current, publicly available information on the company, in order to make its bid.

The Corte Madera, Calif.-based Restoration Hardware then on Nov. 27 said it had agreed to execute the confidentiality agreement, on the condition that Sears "will agree to execute the customary confidentiality and standstill agreement on substantially the same terms that other parties have signed."

Noting that it still was perturbed that "Sears has proposed to reserve the right to launch a tender offer outside the process," the direct-to-consumer and 110-store operator nevertheless said it was "encouraged" by Sears' $6.75-per-share proposal.

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