Struggling retailer Sears and its Kmart subsidiary earned a possible stay of execution today as company chairman Edward Lampert and his hedge fund, ESL Investments, submitted a $4.4 billion offer for the company.
Friday’s offer, which Lampert submitted through an ESL affiliate, Transform Holdco, is for 425 of Sears’ stores. To fund the bid, it has a $1.3 billion financing commitment from investment banks, a spokesperson for ESL in a Friday statement.Sears wins reprieve from liquidation as Chairman Lampert makes last-minute $4.4 billion bid on bankrupt company
The bid would “offer employment to up to 50,000 associates,” the spokesperson for ESL said, cautioning, though, that it would depend on “further actions the company may take between now and closing.” It would also reinstate severance protections for “eligible employees.”
Friday was the deadline for bids to keep the company from falling into the liquidation woodchipper, but it may not be out of danger yet; if the fund is not named a “qualified bidder” by Sears’ advisors by January 4, it will not be able to take part in an auction versus liquidation on the 14th.
As it is, the company also announced plans today to close another 80 of its retail stores and their associated auto centers as a way to further cut costs. This brings the company’s total announced closures to 260 this year, more than a third of the 700 locations the company held at the start of the year. By contrast, in 2010, the company had more than 3,500 locations.
Sears has struggled against the rise of e-commerce giants like Amazon. It sold its signature Craftsman tool trademark to Stanley Black & Decker in 2017, and Lowe’s home improvement stores began selling the brand earlier this year. That deal, estimated to be worth $900 million including a $525 up-front payment, allowed Sears a 15-year royalty-free license to continue selling tools with the branding, and royalties on the brand’s revenue for that period.
In addition, last year the company lost its 101-year partnership with appliance manufacturer Whirlpool after the two companies could not come to a renewal agreement.
Its Kmart division has similarly suffered, declaring bankruptcy in 2002, two years before its buyout by Sears. That company has slimmed from over 2,300 stores in 1994 to just over 300 stores today.