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Sears
and Kmart merger to form 3rd larger US retailer
London: Department store chain Sears Roebuck
and discount retailer Kmart have announced plans of
an $11 billion merger that will create the third largest
retailer in the US.
The
merger will create a new group, Sears Holdings, which
will have 3,500 stores, and will generate annual revenues
of about $55 billion, behind US retail giants, Wal-Mart
and Home Depot.
In
the deal shareholders of Kmart will receive one share
in the new group for each Kmart share owned, while investors
in Sears Roebuck will be offered $50 cash or 0.5 shares
for each existing share.
Sears'
shares surged 22 per cent in New York to $55.40 today,
while KMart shares gained 16 per cent to just over $117.
Rival
retailers' shares were down. Wal-Mart was down almost
1 per cent at $56.41 and Home Depot also slipped 1 per
cent to $42.58.
Sears
is at present the fifth largest US retailer while Kmart
is ranked eighth.
Lehman
Brothers and Morgan Stanley are advising KMart and Sears
respectively.
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Pharma
firms under pricing pressure
New York: Global drug prices as in
India are under pressure and pharma companies see no
relief in sight as for instance European and Japanese
markets saw a fresh round of price cuts this year.
For
drug companies the real worry lies in the US markets,
which has the biggest market for the $400bn-a-year pharmaceuticals
industry. In the US cost-conscious consumers and insurers
here pushing hard for a better deal on drug prices because
of the rise in health care costs.
It
seems clear that drug firms will have to adapt to the
tough environment by doing more to prove the economic
benefits of their treatments for chronic diseases.
As
growing numbers of Americans feel they pay too much for
drugs and the provision of drug benefit under Medicare
state benefit scheme for seniors from 2006 is expected
to lead to more discounts.
Health
care providers are also finding new ways to force down
drug prices and plan a substantial increase in the use
of cheap generics, as a raft of blockbuster drugs have
come up for patent expiry.
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