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Breaking Up the Party: Vornado Said Eyeing Possible Bid for Sears

Vornado Realty Trust could be close to upping the stakes in the bidding for Sears, sources in the retail real estate and finance community said Friday

NEW YORK — Sears and Kmart may be at the altar and ready to wed, but another suitor is in the wings that could drive up the final dowry.

Vornado Realty Trust, the real estate investment trust, could be close to upping the stakes in the bidding for Sears, sources in the retail real estate and finance community said Friday. Vornado, with Steven Roth as chief executive, already owns 4.3 percent of Sears.

Vornado began buying Sears stock last fall and has been rumored since early December to be eyeing the possibility of a joint bid for Sears. REITs by law are prohibited from operating corporate businesses and Vornado is said to be prowling for a financial partner capable of doing that in order to make a bid.

Sources said the REIT’s current involvement in Sears could result in two scenarios: Vornado mounts a last-minute bid and wins Sears, or a Vornado offer forces Kmart Holdings Corp. chairman and hedge-fund wizard Edward Lampert to raise his $11 billion bid in order to gain control of Sears. Bids, sources said, could reach the $12 billion mark.

Vornado’s interest in Sears is believed to be one of the things that drove Lampert to make his bid for the Chicago-based retailer last November. Lampert’s offer to combine the struggling Sears and Kmart into the third-largest store chain in the nation sent tremors through American retailing that are still being felt, with a wave of speculation about who next might buy or combine with whom. The speculation involves everyone from Federated Department Stores to Liz Claiborne Inc., May Department Stores to Saks Inc. and Neiman Marcus Group to Ann Taylor Stores.

If all goes according to Lampert’s plan, the combination of Sears and Kmart is set to close by mid-March. A spokesman for Kmart declined to comment, while a representative for ESL Investments, Lampert’s investment vehicle, could not be reached for comment.

Vornado executives also could not be reached for comment Friday, while a Sears spokesman said the retailer is “still awaiting regulatory approval and at some point we’ll have a shareholders’ meeting and the shareholders will vote on the merger’s approval.

“It will probably be sometime in early March,” the Sears spokesman added. “All is proceeding on schedule. We cleared the Hart-Scott-Rodino [Antitrust Improvements Act] hurdle in early January. We’re now waiting to hear from the Securities and Exchange Commission. At some point we will have the vote.”
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