CHICAGO -- Directors of Sears, Roebuck and Co. Friday approved the spinoff of the company's 80-percent interest in Dean Witter, Discover & Co. to Sears shareholders.
The action is one of the final steps toward completing a strategic repositioning Sears announced last year in an effort to focus available resources on its core businesses: the Sears Merchandise Group and Allstate Insurance.
Sears' Dean Witter financial-services division and its Discover Card operation merged earlier this year to form an independent company, Dean Witter, Discover & Co.
On March 1, Sears sold 20 percent of Dean Witter, Discover & Co. in an initial public offering that raised $905.9 million gross proceeds.
The stock went on the market at $27 and ended the day Friday at $34. 125, down $1 from Thursday. Sears gained 62.5 cents Friday to close at $53.75 on the New York Stock Exchange.
The spinoff of Sears' Dean Witter, Discover & Co. holdings will be achieved through a special dividend payable June 30 to shareholders of record June 28.
Beginning in mid-July, Sears will distribute certificates for its 136,175,000 shares of Dean Witter, Discover & Co. at a ratio of 0.4 shares for every share of Sears common stock. Any fractional shares will be paid in cash.
The Internal Revenue Service has advised Sears that the spinoff ofshares will not be taxable for Sears shareholders.
Sears Chairman Edward A. Brennan termed the spinoff another significant step toward completing the Sears repositioning program announced late last year.
'All of the pieces are falling into place nicely, with our shareholders coming out as the ultimate winners,' Brennan said. 'We are unlocking the tremendous value built up over the years in our financial services subsidiaries to our shareholders and enabling direct public ownership in them.
'These businesses have become household names, ready to stand up solidly on their own and command a strong following of investors,' Brennan said. 'They are strong, successful franchises whose growth and potential are being recognized by the market.'
Sears last month announced plans to sell its Coldwell Banker Residential Group to The Fremont Group and a group of senior Coldwell Banker executives. That transaction is expected to be completed sometime in July.
Sears also announced last month that it had agreed to sell its Sears Mortgage Banking Group, part of Coldwell Banker Residential Services, to PNC Bank Corp. for $328 million in cash. That transaction is to be completed by the end of this year.
And The Allstate Corp., parent of Sears' Allstate insurance subsidiary, last week completed the biggest initial public offering in U.S. corporate history.
Allstate sold 89.5 million shares of common stock, representing 19.9 percent of common equity, at $27 a share in the IPO. In addition, Allstate announced plans to offer $850 million in debt securities to the public.
Net proceeds from the Allstate IPO are being used to make a capital contribution to Allstate Insurance Co., the operating subsidiary of The Allstate Corp., and to reduce indebtedness.
Allstate Insurance Co. was established by Sears in 1931 and is the country's second largest property-liability insurer and 14th largest life insurer. Sears continues to hold 80.1 percent of its parent Allstate Corp.
The Allstate Corp. stock began trading last week on both the New York Stock Exchange and on Chicago's own Midwest Stock Exchange.
Allstate closed Friday at $27.625, down 37.5 cents from Thursday's close.
