August 23, 200

NEW YORK (Reuters) - Kmart finalized Monday a deal to sell 18 of its stores to Home Depot Inc., for $271 million, with an option to sell one more store.

The original pact called for the sale of as many as 24 stores for up to $365 million.

"The stores we are retaining from the originally announced transaction have been operating profitably and better than plan for this year," Julian Day, president and chief executive of Kmart, said in a statement about the revised deal.

Four of the stores have been sold and Kmart has received $59 million from Home Depot, said a statement from Kmart, adding that the sale of nine more stores will be completed in the next five days.

The Troy, Michigan-based retailer also said that nearly 230 employees, or 41 percent of those affected by the deal, will be offered jobs at other Kmart locations.

In addition, Kmart said Home Depot (HD: Research, Estimates) expects to employ about 200 workers per store, significantly above the current level of employment at the existing Kmart stores.

Kmart (KMRT: Research, Estimates) said it expects to sell 17 of the 18 stores, with proceeds totaling $259 million, by the end of the current fiscal quarter. It expects to receive the remaining sales proceeds during the fiscal fourth quarter.

The companies revised their original transaction agreement to provide for the sale of no fewer than 13 stores for $173 million in cash, and up to 19 stores for $288.5 million in cash, said a statement from Kmart.

Additionally, Kmart has been granted an option to sell certain stores which, if exercised by Kmart, would increase the minimum number of stores sold to 15 and the minimum cash to be received to $214 million, said the statement.

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