Reuters: Lampert prevails with midnight offer for Sears
Edward Lampert won board approval to take over bankrupt Sears Holdings for $5.2 billion, according to a Reuters report Wednesday morning, with the promise of keeping its remaining 425 Sears and Kmart stores open.
The board of Sears, which Lampert chairs, had rejected earlier offers by Lampert’s hedge fund ESL Investments to take over the retailer, but changed its view after Lampert added to the bid, and no other viable options surfaced in an open auction.
The deal remains subject to the approval of a bankruptcy judge, with some 45,000 jobs at stake at Sears stores nationally and its headquarters office in Hoffman Estates, Ill., according to Reuters.
ESL was owed $2.7 billion last September when Sears declared bankruptcy, with the company having since put stores nationally on the chopping block including in Milford, Meriden and Waterford.
Sears has one remaining department store in southwestern Connecticut, at Danbury Fair mall, as well as a store in Manchester with the town claiming $700,000 in Sears debt it is owed.
Since the original bankruptcy filing, more than 7,500 claims have surfaced from debtors seeking varying amounts, including the state of New Jersey seeking some $15.5 million in back taxes and other household names like IBM owed nearly $2 million and Facebook after $1.1 million.
Lampert moved ESL to Miami in 2012 from its former home in Greenwich where he lived, while doubling down on a bet that he could restore the fortunes of Sears and Kmart. As the case with Dick’s Sporting Goods in its 2016 acquisition of the bankrupt Sports Authority, Lampert would hold onto Sears stores that have outperformed their peers, while still wrestling with how to reinvigorate the chain’s appeal so it can maintain any growth.
In a 2005 letter to shareholders after a merger agreement between Sears and Kmart, Lampert expressed confidence that store remodelings and new products from Kenmore and Craftsman would create a foundation for success, while promising to oversee “a learning company” in his words that would adjust to buyer whims as they arose.
But like many retailers, Lampert came up with no strategy to win back customers turning on to Amazon and other websites, or to big-box stores like Lowe’s and Home Depot for appliances and tools. From 355,000 employees in 2006, the company has seen its workforce dwindle to about 45,000 today.
“Because of Sears and Kmart’s longstanding history and cultural impact, we are targeted for criticism when our results are poor,” Lampert stated in a 2016 letter to shareholders “But it is unfair to evaluate our approach through the rearview mirror without acknowledging the changing circumstances in our industry as well as our bold attempts to change the way we do business to meet this changing reality.”
Alex.Soule@scni.com; 203-842-2545; @casoulman