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Sears, ESL Investments confirm agreement on $5.2B takeover


According to Market Intelligence, December 2022


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Sears, ESL Investments confirm agreement on $5.2B takeover

The hedge fund that has guided Sears Holdings Corp. for 15 years will pay $5.2 billion to keep the department store alive.

Both Sears and ESL Investments Inc., headed by CEO and Chairman Edward Lampert, confirmed Jan. 17 that they had reached a deal that will allow ESL to acquire Sears. Citing unnamed sources, some media outlets reported Jan. 16 that Sears and ESL had reached an agreement.

The agreement must win approval from a bankruptcy judge on the U.S. Bankruptcy Court for the Southern District of New York before it can take effect. Sears said a hearing is scheduled for Feb. 1 and that the deal could close around Feb. 8 if the court signs off on its plan. The plan will require buy-in from vendors and other unsecured creditors, which could object to the proposal in court.

If approved, the deal "would preserve employment for tens of thousands of associates, as well as the relationships with many vendors and suppliers who provide Sears with goods and services," Sears' board of directors said in a statement. The company said approval of the deal would preserve 45,000 jobs.

In its own statement, ESL said it had revised its offer to Sears multiple times "because we believe Sears has a future as a profitable company that can succeed in today's competitive retail landscape." Lampert reportedly negotiated with Sears in recent weeks in order to reach an agreement after Sears rejected an earlier bid worth $4.4 billion.

Though the agreement would keep Sears operational in the short term, analysts have long been skeptical of Sears' long-term prospects. After the company filed for Chapter 11 bankruptcy on Oct. 15, 2018, analysts said Sears had no clear path to financial health, with some adding that the retailer was likely to follow the Bon-Ton Stores Inc. and Toys R Us Inc. by initiating a liquidation process.