The retail industry received another shake-up today as Sears Holding Corp. (NYSE: S), the parent company behind the recent merger of Sears and Kmart, announced the acquisition of embattled European cheese-maker France (NASDAQ: FROG). The buyout deal, estimated at $2.7 billion, will position Sears/Kmart/France as the world's third largest retailer and 15th ranked military power. Reaction of Wall Street was mixed, with shares of Paris-based France rising 11% in late trading after the announcement, while Hoffman Estates, IL-based Sears Holdings dropped 19%. "The acquisition of France indicates there will be further consolidation within the low-end, weird-smelling retail segment," said Ivan Kaplan, a retail analyst with Bear Stearns. "I wouldn't be surprised if Sears picks up another floundering discounter like Winn-Dixie. Or possibly Spain." Gary Reed, an analyst with UBS, said the deal would position Sears/Kmart/France to remain competitive against mega-retailer Wal-Mart (NYSE: WMT). "It only makes sense for them to united to face a common foe," said Reed. "Both Sears and Kmart have lost significant retail share to Wal-Mart, and France recently surrendered Provence after the invasion of paratroopers from the 131st Wal-Mart Greeter Airborne." "Attention Kmart shoppers! The glory of France, she is born anew," crowed France CEO Jacques Chirac, who will continue as head of the corporation's Northeast regional merchandising division. Terms And Conditions Under terms of the deal, Sears and Kmart will operate separately each with a distinctive brand identity. France will be given dedicated floorspace within each retailer, near housewares, complete with its own airspace, currency, language rights, and pay toilets. "Like Martha Stewart or Jacklyn Smith intimate apparel, we believe France will be a valuable brand for attracting and retaining new customers to Kmart," said Kmart spokeswoman Jill Carpenter. "Our research shows that retail consumers are increasingly seeking convenience, value, and obnoxious ****ty-smelling sales clerks." According to Senior Strategy VP Jim Bailey, France will focus on hard goods within Sears stores. "We are very excited about market synergies," said Bailey. "By selling France-brand cars and appliances, we see a real opportunity for Craftsman tools, repair kits and duct tape." Bailey added that Sears would also immediately discontinue all warranty programs. While the deal still needs to be approved by France stockholders and the United Nations, little opposition is expected after the European conglomerate recently announced its 227th consecutive quarterly decline. Rocky History Founded in 1107, France was once a marketing powerhouse in Europe, commanding a 27% share of the continent as recently as 1775. However, a series of strategic miscues have sent the once-thriving cheese-maker into a steep two-century decline. A bloody management shake-up in 1789, followed by ill-timed entries into to the Belgian and Russian markets, left France scrambling for new product lines. They briefly rebounded in the mid-1800s with the vaunted "softer side of Impressionism" campaign, but the "L'Affaire Dreyfus" line proved unpopular with Jewish consumers. At the fin-de-siÃ¨cle, France was facing another management crisis. In 1914, it embarked on an aggressive turf battle against a raft of regional competitors, resulting in another market share collapse and the loss of 20 million employees. After a bailout from the US government, it briefly rebounded after winning a class action suit against rival Germany. When Germany responded by with an aggressive campaign for shelf space, France's workforce rose up and signed non-compete agreements. During the period it operated as VichyMart. Another US government bailout followed in 1944-5. In subsequent years, ill-timed forays into developing markets like Southeast Asia and North Africa left the cheese-maker financially and psychologically shattered, facing an ever-declining share in world relevance. In recent years, it has restricted its development efforts to silent partnerships with Iraq and Saudi Arabia. Uncertain Future Many analysts remain sceptical whether the three way deal between Sears, Kmart and France will yield any short-term benefits to investors. "Frankly, I'm worried that France has some serious productivity issues," said Kaplan. "They could probably address these with a round of layoffs, but we don't have any evidence that anyone actually works there." "Being associated with France is likely to cause serious damage Kmart's quality reputation," said Bart Matthews of Smith Barney. "I am advising my clients to wait for the expected merger of Pep Boys with the Ukraine." Others believe that the blockbuster deal will reap a windfall. "There are a number of strategic moves that this deal opens up," explained Reed. "Now that they are a nuclear power and a member of the UN Security Council, Sears can invoke international sanctions against Wal Mart, and order air-strikes against Bentonville, Arkansas." Whatever strategic moves may be in the future, Dennis Beezley of Glenn Rauch Securities says that he expects the corporate transition to be smooth. "If you look at their history, one thing is certain," he said. "France is used to hostile takeovers."