U.S. Retail Giants Kmart and Sears to Merge

A surprise $11 billion merger between Kmart Holding department store operator and Sears, Roebuck and Co. was announced in New York today (Wednesday). The new company will be called Sears Holdings Corp.

However, despite the name, the new board of directors will have7 Kmart directors to Sears' 3. Following the merger, which will form the third largest retailer in the country, the owners expect to cut annual costs by more than $300 million.

"We need to have a very low cost structure in order to compete with our biggest competitors," Sears shareholder Edward Lampert said at the press conference announcing the news.

Lampert will be the chairman of the company while Sears' CEO Alan Lacy will be vice chairman and CEO.

It is not clear how the merger will affect agreements with the jewelry industry in the long run, however the company has already promised that agreements with fashion companies such as Lands' End will not be affected.