Sears shares rise on speculation that chain will buy Kmart sites

DOW JONES NEWSWIRES
NEW YORK -- Investors sent shares of Sears Roebuck & amp; Co. up Tuesday on speculation the department store chain will buy a number of choice retail sites from Kmart Holding Corp.
Spokesmen for both Sears and Kmart declined to comment on the speculation, which comes on the heels of Kmart's agreement last week to sell as many as 24 store locations to Home Depot Inc. for as much as $365 million.
That announcement boosted Troy, Mich.-based Kmart's shares, as did Tuesday's speculation about a deal with Sears. New York Stock Exchange-listed Sears shares closed Tuesday at $40.41, up $2.11, or 5.5 percent.
Kmart shares closed at $66.39, up $4.39, or 7.1 percent, on the Nasdaq Stock Market.
Kmart's majority shareholder and chairman, Edward S. Lampert, held a 13.5 percent stake in Sears as of Jan. 3 through his Connecticut-based hedge fund, ESL Investments Inc.
Though his stake in Sears is passive, Lampert was nevertheless rumored Tuesday to be brokering a deal between the two companies.
Analysts declined to comment for the record, but Tuesday's market rumors included speculation that Sears may be interested in buying Kmart stores to fuel the growth of its "Sears Grand" stand-alone store format.
Sears, based in Hoffman Estates, Ill., currently operates a small handful of the Sears Grand stores, which have "big-box" formats and sell smaller-ticket merchandise in addition to large appliances, electronics, tools and apparel.
COPYRIGHT 2004 ASSOCIATED PRESS. ALL RIGHTS RESERVED. THIS MATERIAL MAY NOT BE PUBLISHED, BROADCAST, REWRITTEN, OR REDISTRIBUTED.