" wrote in
:

On Friday, January 6, 2017 at 6:13:15 PM UTC-6, Ed Pawlowski wrote:

But K-Mart bought Sears. Double albatross. K-Mart was always a
discounter but maybe 10 or so years ago they seemed to carry cheaper,
lower quality merchandise.

I'm not positive exactly how the K-Mart Sears combination occurred.
Eddie Lampert the investor hedge fund manager bought one or the other.
Then decided to buy the other. Mainly for the real estate assets.
Not the retail sales. So you cannot say Sears or K-Mart bought the
other.

Basically the sequence of events was that K-Mart went bankrupt,
and Lampert bought a bunch of their debt for pennies on the
dollar, and converted that to equity to take control of the
company. At the same time K-Mart used the bankruptcy to get
out of a bunch of leases and other ongoing expenses, so when
they came out of bankruptcy their finances actually looked
pretty good (anyone who looked closely would see they had
little future, but for the moment it looked good).

Lampert then used K-Mart's now-good credit line and cash on
hand to buy Sears, and then restructured everything to make
Sears the dominant partner (at which point everyone realized
that K-Mart had no future, and had second thoughts about the
credit that had been extended to them).

At least, that's how I remember it - I had friends doing MBAs
at the time, and they studied it all pretty deeply.

John