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Eddie Lampert’s Hail Mary Attempt to Save Sears

The struggling retailer’s CEO has offered to buy Kenmore, among other assets, via his hedge fund, ESL Investments.

  • By Alicia McElhaney

Sears CEO and hedge fund boss Eddie Lampert has offered to acquire some of the beleaguered company’s assets in the hopes of reducing its debt. 

ESL Investments, Lampert’s hedge fund, sent a letter to Sears’ board of directors on Monday suggesting that the retailer should divest the Kenmore brand and assets as well as two businesses — Home Improvement and PartsDirect — from the Sears Home Services division. 

The letter comes at a critical time for Sears, which has been losing value steadily over the past year. The share price has fallen nearly 70 percent since last April, from $10.22 per share on April 24, 2017 to $3.08 as of mid-morning April 23, 2018. 

The letter sent by ESL offers to acquire the Sears Home Improvement business and PartsDirect for $500 million. ESL also said it would consider picking up Kenmore and some of real estate assets, if Sears was interested in receiving offers. 

According to the letter, Sears has marketed these assets for nearly two years, but has not been able to reach agreements with potential buyers. 

“In our view, pursuing these divestitures now will demonstrate the value of Sears’ portfolio of assets, will provide an important source of liquidity to Sears and could avoid any deterioration in the value of such assets,” Lampert wrote in the letter. Kenmore is an “iconic brand with substantial value,” Lampert added, noting that a sale of the brand would give Sears’ liquidity at a time when it is much needed. 

Lampert was, for a time, considered a hedge fund all-star, having founded ESL back in 1988. In 2004, Businessweek magazine called Lampert the “next Warren Buffett.” 

Lampert entered Sears’ orbit in 2005, when the department store closed on its acquisition of Kmart, according to an ESL spokesperson. At the time, Lampert was Kmart’s chairman and owned nearly half of its stock through ESL, according to CNN reporting from that time. 

However, the Sears stock started going south in 2007, and hasn’t recovered, despite Lampert’s efforts. Now CEO and chairman of the company, Lampert’s offer to acquire certain assets of Sears signals another attempt to shore up the brand. 

[II Deep Dive: ESL’s Lampert Rides Sears’ Stock Up]

“Our principal interest is seeing that Kenmore, SHIP, and PartsDirect are divested in the near term in a transaction that delivers the greatest value for Sears, regardless of whether ESL or a third party is the ultimate buyer,” a spokesperson for ESL Investments said via email. 

“This will enable Sears to improve its debt profile and liquidity position, creating the runway to help continue its transformation, and allow these businesses to unlock their considerable potential by further expanding their presence in the marketplace,” the spokesperson added. 

A spokesperson for Sears declined further comment on the release.

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