Sears Holding Corporation (NDAQ:SHLD) disclosed a 13.7% stake in Restoration Hardware Inc. (NDAQ:RSTO) and indicated that it may be interested in a takeover of the hardware company. The news comes after Restoration Hardware entered a definitive merger agreement at $6.70/share with an affiliate of Catterton Partners. Shareholders are hoping that Sears will make a higher bid and unlock additional value for shareholders.

Currently, Sears Holdings is seeking to obtain certain non-public information from Restoration Hardware and has indicated that it would enter into a confidentiality agreement to do so. The two companies have reportedly discussed the terms of such an agreement, but there is no guarantee that anything will come of it. Presumably, this agreement will enable Restoration Hardware to open its books and perhaps lead to a higher bid.

This speculation led to an 11.85% jump in the stock price today - far in excess of the $6.40 per share buyout offer that is currently on the table. Notably, this number is still well below the company's 52-week high of $9.17. But it is unclear whether Sears would raise the bid that significantly in order to beat out a $6.40 bid that is unlikely to be raised in response.

In the end, Sears' previous offer of $4.00/share was too low and an additional bid may be possible once they have more information about the company. This is great news for RSTO shareholders, as it could mean more money for the buyout. Combined, these factors make RSTO and SHLD two stocks worth watching closely!

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