Kmart Corp. filed for bankruptcy, with a growing list of suppliers suspending shipments and its shares trading at just 61 cents as financial markets opened Tuesday. The Troy, Mich.-based discount retailer said its 2,100 stores would remain open as it restructures operations. The Chapter 11 filing was the second-largest in US corporate history but the largest by a retailer. The share price, a 38-year low, had closed at $1.74 Friday. But on Monday Kmart's only supplier of grocery items, Fleming Inc., cut off shipments for nonpayment of a weekly invoice. Scotts Co., which markets lawn and garden products, and two Taiwanese shippers, Nien Hsing Textile and Testrite International, quickly followed suit. (Story, page 1.)
A bitter 14-month merger fight ended as timber industry giant Willamette Industries Inc. agreed to be acquired by rival Weyerhaeuser Co. The announced price: $6.1 billion, plus the assumption of about $1.7 billion in debt and other expenses. The deal still requires the OK of the directors of both companies. But sources said it would end Portland, Ore.-based Willamette's negotiations to insulate itself against a takeover by buying the building products division of a third leader in the industry, Georgia-Pacific. Weyerhaeuser is based in Federal Way, Wash.
Tyco International, the manufacturing and services conglomerate, announced plans to cut $11 billion in debt by selling its plastics business and separating its remaining divisions into four independent and publicly traded companies: healthcare, fire protection/flow control, security/electronics, and financial services. Initial public offerings for each, subject to regulatory approval, are expected to be complete by year's end, the company said. Tyco is based in Hamilton, Bermuda.
Another 7,000 jobs will be cut by Lucent Technologies, the company announced in posting a $1.28 billion operating loss for the fiscal year's first quarter. Last year, the Murray Hill, N.J., telecommunications giant slashed its workforce from 123,000 to 79,000 in reporting third- and fourth-quarter losses of $1.2 billion and $909 million, respectively.