Restructuring Done in Haste, Sears Admits : Retailing: The firm says directors OKd the plan in 1988 without fully considering it. But it said the changes were designed to benefit stockholders.
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CHICAGO — Sears, Roebuck & Co. admitted in court documents that its board of directors approved a restructuring plan in 1988 without fully considering it, as takeover speculation mounted.
The documents were released Tuesday by the retailer, which is defending itself against a shareholder lawsuit.
The suit contends that the company restructured in order to entrench management and thwart any takeover attempt that might provide a richer reward to shareholders.
But Sears said that while it acted hastily, its plan was designed to benefit shareholders. It also said it was not the target of any takeover attempt at the time.
Sears directors, after a short meeting in October, 1988, voted to buy back $1.7 billion in stock, sell off the Sears Tower, divest its real estate unit, refocus its Dean Witter Reynolds and Allstate Insurance units, cut prices and alter the marketing strategy at Sears Merchandise Group.
The company has completed the five-step restructuring, but it failed to boost Sears’ fortunes. The company has been waging a cost-cutting campaign that has sharply reduced employment.
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