The hedge fund investor presiding over the long, slow decline of historic U.S. retailer Sears now wants to buy Kenmore, the company’s house brand appliance maker.
ESL Investments, the hedge fund led by Sears Holdings CEO Eddie Lampert, has announced bid to buy the Kenmore brand, Sears’ Home Improvement business, and its PartsDirect division.
There are also reports that ESL is interested in some of the retailer’s real estate. Sear’s saw its sales drop nearly 30% during the past holiday quarter.
Now substantially in debt, the iconic mall anchor has been looking for ways to increase cash flow, including getting rid of underperforming stores. Sears also has sought new financing, much of it from Lampert’s fund.
In a letter to the Sears’ board, ESL painted a picture of a company on the ropes but not quite down for the count.
“We continue to see value in Sears and its underlying assets and believe strongly that with an appropriate runway Sears will be able to complete its transformation to respond to the challenging retail environment.”
ESL says it believes the value of Sears’ businesses are not being correctly reflected in the capital markets.
Sears has struggled to find interested buyers, except for its sale of the Craftsman tool line to Stanley Black & Decker in 2017.
Sears said that the proposal would be reviewed by an independent board of directors.
ESL, Sears’ second-largest shareholder behind Lampert, called Kenmore an “iconic brand.” The fund said it would be ready to close a deal for this asset within 90 days.
Kenmore recently started selling its appliances via Amazon.com.
‘Deterioration’
Lampert’s hedge fund said it values Sears’ Home Improvement and Parts Direct businesses together at $500 million. The fund would pay for them in cash.
ESL also said it would “be open to making an offer” for Sears’ real estate, including the assumption of $1.2 billion in debt obligations.
The firm said the agreeing to this deal would be a way for Sears to continue operating stores, subsequently leasing the space back from ESL.
“In our view, pursuing these divestitures, will provide an important source of liquidity to Sears and could avoid any deterioration in the value of such assets,” ESL said.
Following its disinvestment of Craftsman last year, Sears confirmed reports that it has been looking to sell off some of its other assets.
The department store chain was recently seen reinforcing its Home Services business, hiring more employees within that division.
Earlier this year, Sears disclosed another round of more than 100 store closures, under both the Sears and Kmart banners. All of these closures are expected to be completed by the end of this month.
