Sears Chairman Eddie Lampert won the auction to save the bankrupt retailer from liquidation after improving his offer to $5.2 billion.
Sears said Thursday it selected Lampert’s ESL Investments hedge fund as the winning bidder for its assets, which include 425 stores. The deal would potentially save the jobs of about 45,000 workers but requires the approval of the bankruptcy court.
When Sears filed for bankruptcy in October, it had 687 stores and about 68,000 workers.
“We are pleased to have reached a deal that would provide a path for Sears to emerge from the Chapter 11 process,” the Sears board said in a news release. “Importantly, the consummation of the transaction would preserve employment for tens of thousands of associates, as well as the relationships with many vendors and suppliers who provide Sears with goods and services.”
As Business Insider reports, Lampert, who took control of Sears in 2005 when it merged with Kmart, “has kept the company afloat through billions of dollars in loans from ESL, the selling off of valuable real estate, and the slow dismantling of Sears’ exclusivity over some big American brands.”
According to The New York Times, he was the only bidder in the bankruptcy auction who sought to keep Sears operating. His original offer of $4.4 billion was rejected by an independent board of advisers for the company.
Sears’ sales have tumbled from $53 billion in 2006 to less than $17 billion in 2017 amid the rise of online shopping and shifts in consumer spending. Analysts have been skeptical that it can make a comeback.
“While there is no doubt that a shrunken Sears will be more viable than the larger entity which struggled to turn a profit, we remain extremely pessimistic about the chain’s future,” Neil Saunders, the managing director of GlobalData Retail, said in a note to clients on Wednesday.
“In our view, Sears exits this process with almost as many problems as it had when it entered bankruptcy protection,” he added. “In essence, its hand has not changed and the cards it holds are not winning ones.”