In an effort to expand its presence outside the mall environment, Sears, Roebuck and Co. has announced that it has agreed to acquire 54 Kmart stores and seven Wal-Mart stores. The transaction is valued at $620 million. The company also plans to invest $200 million to remodel the stores.

The majority are expected to be converted to the Sears nameplate by the fourth quarter of 2005. The average size of the stores to be acquired is 110,000 sq. ft., and nearly 60% are located in some of the nation’s top markets, according to the company.

“These transactions will jump start our strategy to grow the Sears brand off-mall, increase our points of distribution and acquire well-located real estate at a fair value in key markets for Sears,” Sears Chairman and CEO Alan Lacy said in a statement.

Sears will fund the purchase of the stores from available cash. The company will pay a maximum purchase price of $620 million in cash for up to 54 Kmart stores, plus the assumption of existing leases. Sears will make lease payments to Wal-Mart under subleases for the seven Wal-Mart stores. The retailer plans to take possession of four stores in 2004, up to 55 stores in 2005 and the remaining two stores in 2006.