Sears ready to offer $6.75 for Restoration Hardware, more than Catterton's current offer

By Lisa Kerner

Charlotte, N.C., Nov. 26 - Restoration Hardware, Inc. investor Sears Holdings Corp. is prepared to enter into an agreement to offer $6.75 per share in cash via a tender offer in its bid to acquire the company, according to a schedule 13D filing with the Securities and Exchange Committee.

In a Nov. 23 letter to Restoration Hardware's special committee, Sears Holdings said it was "disappointed" that the committee failed to respond to its request for confidential information. The letter was included as part of the SEC filing. Sears Holdings owns 5,307,832 shares, or 13.67%, of Restoration Hardware.

Sears Holdings would consider entering into a merger agreement "on terms substantially similar to the current merger agreement" Restoration Hardware has with an affiliate of Catterton Partners. However, Sears Holdings' agreement would be modified to accommodate a tender offer structure and would include "a lower, more reasonable break-up fee."

Catterton agreed to acquire Restoration Hardware for $6.70 cash per share in deal valued at some $267 million. The deal includes a $10.68 million termination fee.

Sears Holdings accused Restoration Hardware of being "focused exclusively on the insider deal" rather than exploring Sears Holdings' "known interest."

"Our concerns have been increased by the delays we've encountered during the 'go shop' period which have served to further exacerbate the procedural, contractual advantages (including break-up fees, match rights, and new change of control benefits) and informational superiority which the insider group enjoys," the letter stated.

Restoration Hardware is a Corte Madera, Calif.-based retailer of home furnishings, bath fixtures and bathware, functional and decorative hardware, gifts and related merchandise.

Sears Holdings operates as a broad-line retailer through three segments: Kmart, Sears Domestic and Sears Canada. The company is based in Hoffman Estates, Ill.

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