Lampert's Hedge Fund Eyeing Sears Assets

Is Sears Disappearing Before Our Eyes?

Hedge fund pushes for Sears to divest some businesses

Sears Holding Corp. said on Monday it received a letter from Eddie Lampert's ESL Investments Inc., suggesting that the retailer should divest all or a portion of its Kenmore brand, Sears Home Improvement and the PartsDirect businesses.

Some of Sears' assets have been up for sale for more than two years, but the Illinois-based company has not been able to find an acceptable buyer, according to the letter.

Edward Lampert, Sears chairman and CEO, is chairman and CEO of ESL Investments, which is, through its funds, the largest shareholder of Sears Holdings and a lender to the retailer.

The cash consideration for the deal would be financed with equity contributions from ESL and third party debt financing, the letter said. ESL also said it would consider picking up Kenmore and some of real estate assets, if Sears was interested in receiving offers.

"In our view, pursuing these divestitures 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 in the letter.

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.

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The offer by ESL, if formalized, is expected to further accelerate the rationalization and scale back efforts for Sears. (AMZN) and from its own business blunders.

Sears has been struggling to stay afloat for years, closing hundreds of stores as sales suffer in a challenging retail environment. Lampert's fund would be willing to fork over $500 million for SHIP and PartsDirect, Sears said, in addition to submitting a proposal for Kenmore. He took over as the CEO in 2013.

Kenmore is among the brands that could have substantial value.

Hoffman Estates, Ill. -based Sears Holdings Corp. has been exploring alternatives for those businesses, as well as the Craftsman and DieHard brands, for almost two years.

On Monday, Sears confirmed the offer from ESL and stated that it is under review by a board committee for the necessary consideration.

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