Sears Reviewing Sale of Kenmore, Other Assets

The proposed sale to CEO Eddie Lampert's hedge fund would further his goal of making Sears an "asset light" business.
Matthew HellerMay 14, 2018

Sears said Monday it was considering a proposal by CEO Eddie Lampert’s hedge fund to purchase its Kenmore brand and other assets as it continues to look for ways to raise cash.

The embattled retailer’s stock jumped 6.7% to $3.65 on the news that a special committee of the Sears board had begun “a formal process” to explore the proposal that ESL Investments, Sears’ second-largest shareholder behind Lampert himself, made last month.

“Sears has racked up more than $10.8 billion in losses over the past seven years, and any sales would give it a new source of funds as it works to restructure and slash costs,” The Chicago Tribune reported.

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ESL has called Kenmore an “iconic brand” and said it would be prepared to close a deal for the asset within 90 days. It has also proposed acquiring Sears’ Home Improvement and PartsDirect businesses, valuing them together at $500 million.

“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 in April.

Since 2015, Sears has spun off the Lands’ End brand, sold Craftsman to Stanley Black & Decker, and sold 235 stores to real estate investment trust Seritage Growth Properties, in which Lampert holds a stake.

But Sears’ sales have declined at a double-digit percentage for consecutive quarters. Lampert has said his goal is to get Sears back to profitability by running an “asset light” business.

The company’s board established the special committee to evaluate ESL’s proposal, actively solicit third-party interest in the sale assets, and explore any other alternatives with respect to the assets.

“Sears has been exploring alternatives for those businesses — as well as the Craftsman tools and DieHard battery brands — for nearly two years, saying it believes they have room to grow by expanding their reach beyond Sears,” the Tribune said.

“But after failing to find a buyer for assets other than Craftsman, ESL told Sears in a letter last month it should ‘aggressively pursue divestiture’ of all or some of those businesses,” it added.