ESL Investments offers to buy Kenmore from Sears
New York – Sears’ biggest shareholder appears to be pushing for a breakup of the 125-year-old company that has survived two world wars and the Great Depression.
Chairman and CEO Edward Lampert – whose hedge fund has forwarded millions in funding to keep the ailing chain afloat – has asked the struggling retailer to sell its prominent Kenmore appliance brand and its home improvement business, the company said Monday.
The private equity firm ESL Investments said it might buy the assets if the company is willing to sell. That sent shares of Sears Holding Corp., which have lost more than 70 percent of their value in the past year, up nearly 5 percent.
Lampert, who combined Sears and Kmart in 2005 after helping bring Kmart out of bankruptcy, has long pledged to turn the company’s fortunes around. He said the retailer would find ways to capitalize on its best-known brands like Kenmore appliances and DieHard car batteries, as well as its vast holdings of land.
But as the company has seen shoppers move on to Target, Walmart and Amazon, and has closed hundreds of stores, cut costs and sold brands to deal with falling sales, Lampert now appears to have reconsidered.
In his letter to the board, Lampert said Sears has been trying to sell the Kenmore businesses for nearly two years but it has been unable to do so.
Kenmore could have substantial value. Amazon.com began selling Kenmore appliances on its site almost a year ago. ESL said its non-binding proposal gives the appliance and home improvement business an enterprise value of $500 million.
ESL said it also would be open to making an offer for Sears’ real estate, including the assumption of $1.2 billion in debt.
“In our view, pursuing these divestures now will demonstrate the value of Sears’ portfolio of assets, will provide an important source of liquidity to Sears and could avoid any deterioration in the value of such assets,” Lampert wrote.
Sears, which started in the 1880s as a mail-order catalog business, was a back-to-school and appliance shopping destination for generations. Its storied catalog featured items from bicycles to sewing machines to houses, and the company’s stores were a fixture of suburban malls from the 1950s to 1970s.
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