Jun 5, 2019
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Eddie Lampert’s ESL to buy up remaining shares of Sears Hometown

Jun 5, 2019

Transform Holdco LLC, the parent company of Sears and Kmart owned by Eddie Lampert’s ESL Investments hedge fund, announced on Monday that it has entered into a definitive merger agreement with Sears Hometown and Outlet Stores, Inc. The deal will see Transform acquire all outstanding shares of Sears Hometown and its affiliates not already held by ESL for a price of $2.25 per share in cash.

Sears Hometown currently operates 617 retail locations under its different banners - Instagram: @sears

Sears, Kmart and Sears Hometown will therefore be reunited under one parent company for the first time since Sears Hometown was spun off from Sears Holdings Corporation in 2012.
The transaction, which will see Transform take over a network of 491 Hometown stores and 126 Outlet stores spread across 49 US states, Puerto Rico and Bermuda, is intended to help drive the implementation of the company’s strategy to transition towards a smaller store format and expand its footprint.

Sears Hometown and Outlet Stores reported revenues of $1.4 billion in net sales in 2018.
“We are excited to bring Sears Hometown, its associates and network of independent dealers and franchisees back into the Sears and Kmart family,” said Lampert in a release. “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.”
“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,” added Sears Hometown and Outlet Stores CEO and President Will Powell.
Under the terms of the merger agreement, Sears Hometown has also been given a period in which it can sell its Outlet segment, which includes the Sears Outlet and Buddy’s Home Furnishing businesses to a third party. If the company is able to find a buyer for the segment willing to pay no less than $97.5 million during this time, Transform will not acquire the aforementioned businesses as part of the Sears Hometown merger.

It’s been a tumultuous few months for Sears. Following its filing for Chapter 11 bankruptcy in October 2018, Sears Holdings’ assets were purchased by ESL through Transform, formed for this purpose in February 2019.

Since then Lampert – former majority shareholder of Sears Holding and current Transform chairman – has been sued by the Sears Holding restructuring team, who accuse him of having stripped the company of its assets and driven it towards bankruptcy.
The merger agreement between Transform and Sears Hometown is expected to close in the latter’s third quarter.

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