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The new company will be the third largest retailer in revenue in the United States (behind Wal-Mart and Home Depot), and the second-largest in terms of full-line and off-mall locations.

The combined company expects to complete the merger in March 2005 and will have its headquarters in Hoffman Estates.

1 Rationale for merger

The proposed merger was approved by the board of directors of the two companies on November 16, 2004 and announced the next morning. During a conference call to investors and other stakeholders, the company, particularly Alan J. Lacy , cited several reasons for combining forces:

• Sears has begun investing in new, larger off-mall stores, called Sears Grand stores. Earlier in the year Sears had purchased dozens of current Kmart locations; the merger permits the combined company to accelerate that process.
• Management believes that the combined company can be of greater value to its stockholders as an operating company than as sources of liquidating real estateReal estate is a legal term that encompasses land along with anything permanently affixed to the land, such as buildings. Real estate is often considered synonymous with real property (also sometimes called realty , in contrast with personal property, or assets.
• Proprietary brandThis article is about brands in marketing. For other uses, see Brand (disambiguation McDonald's, represented by the Golden Arches, is one of the world's most famous brands A brand takes the form of a symbolic construct created by a marketer to represent as held by both companies ( CraftsmanCraftsman is a line of tools, mainly hand tools and power tools, sold by Sears. It has been one of Sears' best-known brand names for decades. The Craftsman Truck Series, a NASCAR junior league racing series in which pickup trucks are raced, is sponsored b, KenmoreKenmore is the name of several places in the United States of America: Kenmore, New York Kenmore, Washington Kenmore is also a brand name of household appliances produced by Whirlpool and sold by Sears in the USA. Kenmore is also a mountain village in Per, Lands' EndLands' End is a Dodgeville, Wisconsin-based clothing retailer specializing in casual clothing, luggage, and home furnishing. The majority of Lands' End's business is conducted through their mail-order and Internet sales, but the company also runs more tha, DiehardDiehard is a premium brand of automotive battery marketed by Sears. The brand dates to the 1960s. In its earliest years, the brand was guaranteed to last "forever", that is, as long as the original owner still owned the car in which it was originally inst, Martha StewartMartha Stewart (born August 3, 1941) is a popular television and magazine personality known for her cooking, gardening, etiquette, and arts and crafts projects, and as a general lifestyle guide and homemaker. Starting in 2002 her career was rocked by a sc Everyday, Joe Boxer , Jaclyn Smith, Sesame Street) can be made more accessible to their target demographics by leveraging their combined real estate holdings. This contributes to an expected $200 million/year in revenue synergies.
• At least $300 million/year in cost savings is expected annually, particularly in the supply chain and in administrative overhead.
• The establishment of a shared customer-focused corporate culture between the two companies should yield improvements in revenue per unit area.

Preservation of two brands after the merger allows Sears to focus on customers who own their own homes and earn a higher income than those targeted by Kmart.