Kmart Stock Soars Amid Merger Rumors

Kmart Corp. stock closed up nearly 12% after a published report said the discount retailer could be the target of a merger with supermarket giant Safeway Corp. Kmart shares closed at $17, up $1.81, in heavy trading on the New York Stock Exchange. BusinessWeek magazine had reported that Safeway was looking at Kmart in the wake of Wal-Mart Corp.’s recent purchase of British supermarket chain Asda Group. Kmart Chairman Floyd Hall said in October that the company would consider merging or aligning with a grocery business. Whereas Wal-Mart has been successful with its sprawling Supercenters, some Wall Street analysts have said Kmart needs another company’s help to build a food distribution system. Kmart spokeswoman Mary Lorencz said the company had no comment on the rumors. Melissa Plaisance, spokeswoman for Pleasanton, Calif.-based Safeway, declined to comment directly, but repeated an earlier statement that “the focus of the company’s acquisitions has been high-quality supermarkets.” Gary Giblen, an analyst with San Francisco-based Bank of America Securities, called the rumor “bunk.” Although Troy, Mich.-based Kmart has long said it would like to become partners in some way with a supermarket chain, he said no one has shown serious interest, including Safeway.