Sears’ Spinoff of Lands’ End

Sears’ Spinoff of Lands’ End

Shane Van Dalsem Journal of Case Studies
November 01, 2018
SKU: BUS-00686

Region of the world: North America
Topic: Finance & Accounting
Page length: 19
Keywords: spinoff, divestiture, financial statement analysis, cost of capital
Price: $4.00 | €0.00
No votes yet

Following several years of declining revenues and profits, in 2011 Sears began to hive off its business divisions. As part of its series of divestitures, on December 6th, 2013 Sears announced its intention to spin off Lands’ End in a stock distribution to the existing Sears’ shareholders. With the spinoff, each Sears shareholder received approximately 0.3 shares of Lands’ End stock for each share of Sears stock that they owned and Sears would receive an approximate cash payment of $500 million dollars from Lands’ End which was funded from the proceeds of a $515 million loan. In light of terms of the spinoff, the stockholders and other stakeholders of Sears and Lands’ End needed to evaluate their relationships with the firms. Should Lands’ End stockholders keep their shares or sell them? Would the terms of the spinoff hurt the ability of Lands’ End to operate in the future?