Sears/Kmart Acquires France

The retail industry received another shake-up today as Sears Holding Corp. (NYSE: S), the parent company behind the recent merger of Sears and Kmart, announced the acquisition of embattled European cheesemaker France (NASDAQ: FROG). The buyout deal, estimated at $2.7 billion, will position Sears/Kmart/France as the world's third largest retailer and 15th ranked military power.

Reaction of Wall Street was mixed, with shares of Paris-based France rising 11% in late trading after the announcement, while Hoffman Estates, IL-based Sears Holdings dropped 19%.

"The acquisition of France indicates there will be further consolidation within the low-end, weird-smelling retail segment," said Ivan Kaplan, a retail analyst with Bear Stearns. "I wouldn't be surprised if Sears picks up another floundering discounter like Winn-Dixie. Or possibly Spain."

Gary Reed, an analyst with UBS, said the deal would position Sears/Kmart/France to remain competitive against mega-retailer Wal-Mart (NYSE: WMT).

"It only makes sense for them to united to face a common foe," said Reed. "Both Sears and Kmart have lost significant retail share to Wal-Mart, and France recently surrendered Provence after the invasion of paratroopers from the 131st Wal-Mart Greeter Airborne."

"Attention Kmart shoppers! The glory of France, she is born anew," crowed France CEO Jacques Chirac, who will continue as head of the corporation's Northeast regional merchandising division.

Terms And Conditions

Under terms of the deal, Sears and Kmart will operate separately each with a distinctive brand identity. France will be given dedicated floorspace within each retailer, near housewares, complete with its own airspace, currency, language rights, and pay toilets.

"Like Martha Stewart or Jacklyn Smith intimate apparel, we believe France will be a valuable brand for attracting and retaining new customers to Kmart," said Kmart spokeswoman Jill Carpenter. "Our research shows that retail consumers are increasingly seeking convenience, value, and obnoxious shitty-smelling sales clerks."

According to Senior Strategy VP Jim Bailey, France will focus on hard goods within Sears stores.

"We are very excited about market synergies," said Bailey. "By selling France-brand cars and appliances, we see a real opportunity for Craftsman tools, repair kits and duct tape."

Bailey added that Sears would also immediately discontinue all warrantee programs.

While the deal still needs to be approved by France stockholders and the United Nations, little opposition is expected after the European conglomerate recently announced its 227th consecutive quarterly decline.

Rocky History

Founded in 1107, France was once a marketing powerhouse in Europe, commanding a 27% share of the continent as recently as 1775. However, a series of strategic miscues have sent the once-thriving cheesemaker into a steep two-century decline.

A bloody management shake-up in 1789, followed by ill-timed entries into to the Belgian and Russian markets, left France scrambling for new product lines. They briefly rebounded in the mid-1800s with the vaunted "softer side of Impressionism" campaign, but the "L'Affaire Dreyfus" line proved unpopular with Jewish consumers. At the fin-de-siècle, France was facing another management crisis.

In 1914, it embarked on an aggressive turf battle against a raft of regional competitors, resulting in another market share collapse and the loss of 20 million employees. After a bailout from the US government, it briefly rebounded after winning a class action suit against rival Germany.

When Germany responded by with an aggressive campaign for shelf space, France's workforce rose up and signed non-compete agreements. During the period it operated as VichyMart. Another US government bailout followed in 1944-5.

In subsequent years, ill-timed forays into developing markets like Southeast Asia and North Africa left the cheesemaker financially and psychologically shattered, facing an ever-declining share in world relevance. In recent years, it has restricted its development efforts to silent partnerships with Iraq and Saudi Arabia.

Uncertain Future

Many analysts remain skeptical whether the three way deal between Sears, Kmart and France will yield any short-term benefits to investors.

"Frankly, I'm worried that France has some serious productivity issues," said Kaplan. "They could probably address these with a round of layoffs, but we don't have any evidence that anyone actually works there."

"Being associated with France is likely to cause serious damage Kmart's quality reputation," said Bart Matthews of Smith Barney. "I am advising my clients to wait for the expected merger of Pep Boys with the Ukraine."

Others believe that the blockbuster deal will reap a windfall.

"There are a number of strategic moves that this deal opens up," explained Reed. "Now that they are a nuclear power and a member of the UN Security Council, Sears can invoke international sanctions against Wal Mart, and order airstrikes against Bentonville, Arkansas."

Whatever strategic moves may be in the future, Dennis Beezley of Glenn Rauch Securities says that he expects the corporate transition to be smooth.

"If you look at their history, one thing is certain," he said. "France is used to hostile takeovers."

Comments

[William Johnson]

Great stuff. How can I get on your email list?

[Jeff]

Hmmmmmm.... now I can't find it at ScrappleFace. Either Scott retracted it, or it was never there and I imagined things. Either way, I hereby retract my assertion.

[Jeff]

Uhhhhh... the first group of paragraphs of this is identical to an article on ScrappleFace - with no attribution here or there. Somebody is copying somebody, but I have no clue who's screwing who...

Don't laugh...the guys at Merrill Lynch have been working on this one for awhile...word is though they are waiting for the EU constitution so they can roll up all of Europe in the deal...

If this means Renault parts will become readily available out here, should we look for Le Ramblers on the dirt at Knoxville?

Voted for Nixon
Cedar Rapids, IA.

Haaaaaaa!!

But what about Stuckey's??

[Anselmo Cardinal Trentino]

Splendid piece of work, pal.

Funny, too.

Hilarious! Especially the "Rocky History" part. I laughed so I cried.

By the way, I just came across this item on eBay:

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STARTING BID: 2,000,000,000 EURO"

-A.R.Yngve
http://yngve.bravehost.com

[Sir Not Appearing in this Blog]

I almost didn't make it past the first few paragraphs. After my wife called the paramedics (I was asphyxiated from laughing so hard) they were wary of letting me near my iBook again.

Funniest thing I've read since the "Cracker Culture" bit.

[spd rdr]

GOING OUT OF BUSINESS!!!!
EVERYTHING MUST GO! GO! GO!

Yes, after 1000 years in business, Belgium is closing its doors, forever! Due to recent big box mergers, Belgium is forced to liquidate. Everything in the entire country must be sold!

For the first time in its history, Belgium has not been invaded for more than forty years!! Take advantage of our overstocked inventory! Choose from handy "Doormat of Europe" doormats and framed copies of the Treaty of Munster. And don't forget about our large selection of overpriced beer and smuggled diamonds!

For two days only, take advantage of Belgium without using force! No reasonable price will be refused!

Belgium - The Last Place You'd Look

Lol. great!

[mplspug]

I also can't help but think this will hurt them in the domestic market unless they change France's policy of "the customer is never right if they are American". I checked out their online store - great new Saddam Hussein "Oil for Food" beret line!

[mplspug]

Does anybody know if they are considering putting in wine shops in all the K-maparts now?

Ilaughed so hard tears were running down my face. I have your site bookmarked now!

[spongeworthy]

Foreign buyers of French arms will be pleased with the Craftsman Tool policy to be instituted upon completion of the merger. Any bomb, tank, rifle or aircraft carrier that breaks for any reason, as long as you own it, will be replaced on the spot no questions asked.

Sears is currently seeking to fill positions in the Returns Department and will consider recruits from ethnic and religious groups with experience handling volatile substances. Sears is an Equal Opportunity Employer, and encourages diversity among it's employees.

[dsesq67]

Brilliant!!!!

Brilliant.

[Daybrother]

Excellent.

[Mike from TO]

You've made my day. Thanks!

[Iron Fist]

[Dark, malevolent laughter]

Indeed.

Well done, holmes :-)

[Axeman]

Brilliant!

Just discovered your site via "Dollywood". Can't get enough.