The exact number of shares will not be known until Monday morning, as the Sears people remain ensconced in their offices all weekend in order to calculate the tax-consequences for their corporation in this tax-free dividend as well as ascertain the exact number of shares outstanding in both companies, but the going estimate from Sears Global HQ is that investors in Sears will be holding around 0.93 shares of Allstate for every one share of Sears they owned before. Dividend-oriented investors need not worry as the dividend is being split to maintain the previous yield.
The completion of the Allstate spin-off is but the latest chapter in a series of strategic decouplings that have allowed Sears to refocus on its core business: retail. Sears created its Allstate subsidiary back when the department store was the major consumer focus, producing one-stop shopping for all financial services. Not too long ago, Coldwell Banker and Dean Witter/Discover also were under the Sears aegis, making it a financial as well as a retailing heavyweight. With the selloff of the last 80% stake in Allstate, it's a financial heavyweight no more.
Sears is also looking to get out of the real estate business in the coming months, having both already sold its fabled Sears Tower to a pension fund and having plans to spin off Homart Corp., its wholly-owned, mall-owning subsidiary.
As we posited earlier, investors with Sears in their brokerage account will have about 0.93 shares of Allstate Monday morning. However, the stock will actually trade two ways until July 12th, according to the New York Stock Exchange. In order to have them settle at a fair price, the NYSE will allow "Sears with Allstate" and "Sears without Allstate" to trade for a week and a half, allowing investors to purchase either.
Dividend Reinvestment Plan investors in Sears will be allowed to sell their Allstate shares through the Sears DRP or to go ahead and join the Allstate DRP. New Allstate shareholders can contact Allstate Investor Relations at (800) 355-5191 to find out how to enter into the Dividend Reinvestment Plan.
-- MF Templar