Paramus, NJ, March 22--Vornado Realty Trust said it would support Kmart's $12 billion acquisition of Sears, quashing speculation the real estate company would make its own bid for the struggling department store.
Vornado had sparked a jump in Sears' stock price in November when it boosted its holdings in the retailer to 4.3 percent.
That triggered speculation among Sears' investors and analysts that Vornado would team with a private equity firm or retailer to take over the retailer and convert some of its mall locations into other stores.
Sears shares have constantly traded above Kmart's offer price as investors speculated a higher bid may surface. The Sears-Kmart deal, however, carries a $400 million break-up fee that may inhibit other bidders.
Some of Sears' 1,971 stores had been seen as an attractive lure for Vornado or another real estate firm to close and redevelop for more successful retailers, analysts said.
Vornado's public support of the Kmart-Sears deal came just days after it said it was joining Kohlberg Kravis Roberts & Co. and Bain Capital to buy toy retailer Toys R Us Inc. Wall Street analysts expect Vornado to redevelop many of the Toys R Us sites.
Following Vornado's announcement, shares of Sears rose almost 1.8 percent, or $1.03, to close at $57.98 on the New York Stock Exchange. Shares of Kmart added 2.8 percent, or $3.55, to close at $128.74 on the Nasdaq Stock Market.
Shares of Vornado shed 55 cents to close at $71.50 on the NYSE. Vornado, which holds about 1.18 million shares of Sears stock and a derivative position for an additional 7.92 million shares, said it will choose to get stock in the Kmart-Sears deal.
