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Sears makes offer for Restoration Hardware

Following an announcement by specialty home decor retailer Restoration Hardware to enter into an acquisition agreement with a private equity firm, Sears Holdings has made a bid for the financially struggling retailer.

Sears Holdings has offered $6.75 per share for the mid-to-high-end retailer, a higher bid than the $6.70 per share offer from private equity firm Catterton Partners. Sears currently owns a 13.7 percent stake in Restoration Hardware.

Restoration Hardware, however, has said it is unwilling to enter into a confidentiality agreement requested by Sears. In a letter to Restoration Hardware, accompanying a filing with the Securities and Exchange Commission, Sears requested the retailer provide some non-public information and additionally enter into a confidentiality agreement over that information.

Today, Restoration Hardware said it would go forward with providing information to Sears as long as Sears will agree to execute the customary confidentiality and standstill agreement on substantially the same terms that other parties have signed.

"While we do not understand your requirement that we submit such a proposal prior to providing us with due diligence information,” Sears said in the letter, “we are prepared to inform you that, based on the public information currently available to us, we would be prepared to enter into an agreement to offer your stockholders $6.75 per share in cash via tender offer.”

Restoration Hardware announced earlier this month a planned sale to Catterton Partners for $267 million. The retailers said the move would take Restoration Hardware private.

Restoration Hardware has seen several quarters of weakness due to an ultra-competitive home decor and furnishings environment. Strong competition from similar retailers, including Pottery Barn, Williams-Sonoma Home, West Elm, Pier 1 and Design Within Reach, combined with a downturn in the housing sector, led to losses in the company’s most recent fiscal quarter.

In August, Restoration Hardware announced it would cut 100 jobs at the company’s Corte Madera, Calif.-based headquarters in order to save $9 million annually. In its second quarter, the company swung to a $5.5 million loss from $2.2 million in earnings last year.

Sales rose 2.2 percent to $183.8 million compared with $179.3 million last year.

Restoration Hardware has approximately 100 retail stores and eight outlet stores in 30 states, Washington, D.C., and Canada.

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