HOFFMAN ESTATES, Ill. — Sears Holdings Corp. disclosed in a Thursday filing that it plans to spin off its Orchard Supply Hardware Stores Corp. business as a separate, publicly traded company.
In a filing with the Securities and Exchange Commission, Sears said it believes that the 89-store chain will generate more shareholder value on its own. Shares in Orchard Supply Hardware will be distributed equitably among shareholders of Sears Holdings, which owns 80% of Orchard Supply, and Ares Management LLC, which owns the remaining 20%. As a result, ESL Investments, the hedge fund controlled by Edward S. Lampert, which controls roughly 61% of Sears Holdings, will become the new company's largest owner.
Sears has valued Orchard at $82 million. No target price for the IPO has yet been set and no spin-off date has been announced. Orchard generated a profit of $8.7 million and $661 million in revenue in fiscal 2010, but its revenue has dropped for several consecutive years and its profit picture has been erratic.