Wal-Mart Stores Inc. announced Tuesday that its Sam's Club unit will buy 91 warehouse locations from Pace Warehouse Inc., a subsidiary of Kmart Corp.
Kmart said this transaction will result in net proceeds of about $300 million, which is equal to Pace's net tangible book value.Kmart expects to take a fourth-quarter charge of about $450 million, pre-tax, to cover the cost of closing 41 Pace Warehouse locations that are not being sold to the Wal-Mart unit.
The sale price includes a premium over net book value to offset the cost of closing Pace Warehouse locations that are not part of the sale agreement, Kmart said.
Pace Warehouse now operates 113 units and has another 19 units under contract but unopened, Kmart said.
The sale, which is subject to clearance under the federal antitrust law, is expected to close in January, Wal-Mart said.
Wal-Mart also said that the Pace Warehouse clubs being purchased "will continue to operate under the Pace name, until the sale is finalized. Pace memberships from virtually all Pace clubs will be honored by Sam's after the sale is finalized through their expiration date."
Joseph Antonini, Kmart's chairman and chief executive officer, said the "decision to sell these Pace Membership Warehouse locations is based on strategic factors designed to enhance shareholder value.