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updated 20:51, Fri October 05, 2007

Sears Could Be Headed for Change; Activist Investors Takes Stake, Media Reports Say

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NEW YORK (AP) -- Activist investor William Ackman has reportedly taken a 3.5 percent stake in Sears Holdings Corp. with a possible eye toward prompting changes at the department store retailer.

Ackman's hedge fund, Pershing Square Capital Management, has a 5 million-share stake in Sears, according to StreetInsider.com. Sears shares have dropped 25 percent in the past six months, on concerns about deteriorating business fundamentals and rising competitive pressures.

The investor has previously lobbied for changes at McDonald's Corp., Wendy's International Inc. and Target Corp. These changes focused on real estate divestitures and other issues.

Ackman reportedly said he is looking forward to working with Sears Chairman Edward S. Lampert, who is also a high-profile investor.

Ackman could be eyeing Sears Canada. Last November, Sears Canada shareholders rejected Sears' $792 million takeover bid after Ackman, who owns a large stake in the Canadian operation, wouldn't support the bid, saying the offer was inadequate.

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