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Sears Mulls Restoration Hardware Buyout

By Staff -- Gifts and Dec, 11/20/2007 8:15:00 AM

San Francisco — Sears Holdings Corp., the parent company of mass market retail chains Sears and Kmart, bought a 13.7 percent stake in specialty home furnishings retail chain Restoration Hardware Inc,. paying $30.2 million cash for 5.3 million shares, or about $5.67 a share.

Sears disclosed the stake in a regulatory filing late yesterday. Shares of Restoration Hardware jumped 21.5 percent to $7.69 in after-hours activity.

Sears is considering a takeover bid for Restoration Hardware, potentially scuttling private equity firm Catterton Partners' deal to take Restoration private for $6.70 a share.

According to Sears’ Securities and Exchange Commission filing, Sears first contacted Restoration about a possible deal in June. Sears then offered $4 a share for Restoration in October, but was rejected. Sears may make an offer for all of Restoration Hardware's shares or buy additional shares on the open market. It may also seek to acquire or influence control of the company, including representation on the board, according to reports.

Catterton's offer must still be approved by Restoration Hardware shareholders. If Restoration accepts another offer, it agreed to pay Catterton a $10.68 million termination fee.

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