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Transform to buy Sears Hometown and Outlet Stores


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Transform to buy Sears Hometown and Outlet Stores

Transform Holdco LLC, an affiliate of Sears and Kmart Stores parent ESL Investments Inc., on June 3 said it will buy the remaining 42% of Sears Hometown and Outlet Stores Inc. for $2.25 per share in cash.

ESL Investments, owned by former Sears Holdings Corp. Chairman and CEO Edward Lampert, and its affiliates already own a 58% stake in Sears Hometown.

The all-cash transaction will reunite Sears and Kmart with Sears Hometown, which was spun off from Sears Holdings in 2012.

"Having these businesses under common ownership will accelerate Transform's strategy of growing its smaller store format by adding Sears Hometown stores," the company said in a statement. "It will also expand the company's footprint as a multi-channel business that can serve customers through a variety of shopping experiences to meet their needs, provide growth for Transform's marquee brands, including Kenmore® and DieHard®, and increase opportunities for Sears Home Services and Financial Services businesses, as well as the Shop Your Way® social shopping destination and rewards program."

Under terms of the deal, Sears Hometown has an option to sell its Sears Outlet and Buddy's Home Furnishing Stores businesses for no less than $97.5 million before Oct. 23. Transform's offer is subject to an upward adjustment depending on the net proceeds from the sale of outlet division.

"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," Lampert said in a statement. In April, Lampert tried to block Sears Hometown's liquidation by replacing two directors on the retailer's board and revising its bylaws.

The companies expect to complete the transaction during Sears Hometown's third quarter of 2019. Sears Hometown will cease to be a publicly held company following the deal.

Cleary Gottlieb Steen & Hamilton LLP is acting as legal counsel for Transform. Shearman & Sterling LLP is serving as legal counsel, and PJ SOLOMON is serving as financial adviser for Sears Hometown's special committee, which has approved the transaction.

The development comes days after Transform denied it is avoiding paying severance to former Sears Holdings employees who lost their jobs during the department store operator's bankruptcy.