Eddie Lampert is taking steps to reunite the Sears family.
The company’s ex-CEO has agreed to buy the remaining shares of Sears Hometown and Outlet Stores Inc. not already owned through his hedge fund, ESL Investments Inc.
Transform Holdco LLC — headed by Lampert and parent to Sears and Kmart — announced today that it would pay $2.25 per share in cash to snap up 42% of the business. (ESL Investments and its affiliates, which are majority owners of Transform, currently hold 58% of Sears Hometown’s outstanding stock.)
The move reunites Sears and Kmart with Sears Hometown, which was spun off from parent company Sears Holdings Corp. in 2012.
In a statement, Lampert wrote, “We are excited to bring Sears Hometown, its associates and network of independent dealers and franchisees back into the Sears and Kmart family … While initially the companies will operate independently, we see many opportunities where we can partner to serve our customers better and enjoy efficiencies of scale once these businesses are under one roof.”
As part of the agreement, Sears Hometown has a specified period of time in which it can market and sell Sears Outlet and Buddy’s Home Furnishing Stores to a third party for no less than $97.5 million. If the businesses are sold in accordance with the deal’s terms, they will not be acquired by Transform.
The all-cash transaction — which was negotiated and approved by a special committee of Sears Hometown’s board of directors — is expected to close in the third quarter, when the firm is scheduled to go private.
Last year, Sears Hometown and Outlet Stores recorded revenues of $1.4 billion. It has more than 600 stores across 49 states, Puerto Rico and Bermuda, with the firm adding that it would rank as the third-largest appliance retailer in the United States in terms of sales.
“I believe this is the best path forward for Sears Hometown and serves the interests of all our constituents, including our customers, associates, dealers, franchisees and stockholders,” said Sears Hometown CEO and president Will Powell. “We believe that reuniting our Sears Hometown segment stores with Transform’s Sears full-line stores will result in a more consistent customer experience across Sears branded storefronts, generate higher total revenues and leverage efficiencies of scale to improve costs and margins, all of which could lead to improved profitability for Sears Hometown’s dealers and franchisees.”
Last month, the embattled Sears, which filed for bankruptcy in October and shuttered hundreds of stores, opened three new and smaller format stores in an attempt to reconnect with shoppers. The apparel-free Sears Home & Life outposts launched in Anchorage, Alaska; Lafayette, La.; and Overland Park, Kan. — occupying only up to 15,000 square feet of floor space, compared with traditional Sears stores that often spanned more than 100,000 square feet. The retailer also unveiled a new logo as well as an updated slogan, “Making moments matter.”
Lampert has had a monthslong legal battle with unsecured creditors, who have accused him of illegally siphoning billions of dollars of assets as the retailer spiraled into bankruptcy.
He also made headlines on Friday when Democratic presidential candidate Sen. Elizabeth Warren and Rep. Alexandria Ocasio-Cortez sent a letter to the billionaire executive that criticized his efforts to avoid repaying Sears Holdings for $43 million in severance payments to thousands of laid-off Sears workers. (Lampert had agreed to cover the payments as part of the terms of the deal struck in February to buy the bankrupt chain for $5.2 billion through Transform.)
Transform issued a statement in response, calling the charges false and adding that “employees of old Sears [Sears Holdings Corp.] who lost their jobs during bankruptcy have already received their severance payments.”
“In the asset purchase agreement, Transform agreed to reimburse old Sears for these severance payments in exchange for the receipt of certain assets,” it said. “Old Sears has admitted that $55 million of those assets have not been transferred to Transform, although Transform believes the amount is larger. As a result, Transform is not obligated to reimburse old Sears for having made the severance payments.”
This story was updated with comments from Transform Holdco LLC.