Eddie Lampert’s ESL in bid for Sears Hometown and Outlet Stores

Eddie Lampert is looking to buy full ownership of a division that Sears once owned.

Sears Hometown and Outlet Stores said Monday it received an offer from Transform Holdco LLC, an affiliate of Lampert’s ESL Investments hedge fund, to acquire all of the retailer’s stock that isn’t already owned by the fund.

Lampert, through ESL and its affiliates, owned nearly 58.8 % of Sears Hometown’s stock as of Dec. 6, 2018. The proposal price was $2.25 per share.

The retailer dismissed the offer following a review by a special committee of independent directors, saying that a transaction on the terms contemplated by the proposal wouldn’t be in the best interests of the company’s unaffiliated stockholders. However, the two parties are continuing to discuss potential transactions.

Sears Hometown, which sells home appliances, hardware, tools, and lawn and garden equipment, is a publicly traded company that was spun off in 2012 from Sears Holdings Corp. As of February 2, 2019, the company or its independent dealers and independent franchisees operated a total of 677 stores across 49 states as well as in Puerto Rico and Bermuda.

“We believe our proposal, which will provide certain value and liquidity at a considerable premium to the market price, presents a superior outcome for [Sears Hometown & Outlet Stores] stockholders as compared to the uncertain outcomes facing [Sears Hometown & Outlet Stores] if it continues on its current path as a standalone company,” Lampert wrote in a letter to Sears Hometown and Outlet Stores’ board. “In addition to the immediate value provided to [Sears Hometown & Outlet Stores’] stockholders, we believe that the transaction would benefit the company’s other stakeholders, including employees, independent dealers and franchisees and the local communities that rely on them.”

The bid by Lampert comes days after Sears announced it will open three small-sized, hardlines stores, called “Sears Home & Life,” in May. The stores, which will range in size from 10,000 sq. ft. to 15,000 sq. ft., will be dedicated to major and small appliances, mattresses and smart home products.