1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
Holly LaFon
Holly LaFon
Articles (10163)  | Author's Website |

Eddie Lampert Wins Bid to Buy Sears From Bankruptcy

ESL Investments to buy company for $5.2 billion

January 17, 2019 | About:

Fifteen years after creating Sears Holdings (SHLD) by helping Kmart arise from bankruptcy and merge with Sears Roebuck & Co., billionaire Eddie Lampert is the winning bidder in its bankruptcy court-supervised auction.

Lampert’s hedge fund ESL Investments, will acquire “substantially all of the company’s assets, including the ‘Go Forward Stores’ on a going-concern basis” at a cost around $5.2 billion, the company said in a press release. According to bankruptcy documents, the company has between $1 billion and $10 billion in assets. Its liabilities total between $10 billion and $50 billion.

Lampert’s bid was an increase from his former $4.6 billion proposal made Dec. 6 to save the store from liquidating. The bankruptcy auction ended Wednesday morning.

Sears Holdings’ shares, which trade began trading on the over-the-counter markets after the company filed bankruptcy in October, closed down 9.82% on Thursday to 70 cents. They have gained more than 57% year to date.

1662388179.png

As one of the biggest collapses of brick-and-mortar retailers in recent decades, Sears Holdings traded around $38 per share when Lampert took over as CEO in January 2013 and as high as $156 before the financial crisis. Lampert stepped down as CEO when the company filed for Chapter 11 bankruptcy protection and remained as chairman of the board.

Prior to the bankruptcy, Sears reported annual net losses since 2012 and watched revenue slip every year since 2007 as it closed stores and sold assets to shore up its balance sheet.

1224471149.png

Lampert’s purchase will “provide a path for Sears to emerge from the chapter 11 process” and salvage some jobs, the company said. The iconic retailer employs roughly 45,000 workers and will operate around 400 stores, a decline from around 2000 stores five years ago.

“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,” Sears’ restructuring committee of the board of directors said.

Lampert will still require approval for the deal to go through, with a hearing date set for Feb. 1. If he wins, the transaction is scheduled to close on Feb. 8.

Aside from Seritage Growth Properties (NYSE:SRG) and other Sears-related assets, ESL Investments has only two other long stock holdings, AutoNation (NYSE:AN) at 50.2% of the portfolio and Sears spin-off Lands’ End (NASDAQ:LE) at 33.14%.

See Eddie Lampert's portfolio here.

About the author:

Holly LaFon
I'm a financial journalist with a Master of Science in journalism from Medill at Northwestern University.

Visit Holly LaFon's Website


Rating: 0.0/5 (0 votes)

Comments

Please leave your comment:


Performances of the stocks mentioned by Holly LaFon


User Generated Screeners


pjmason14Momentum
pascal.van.garsseHigh FCF-M2
kosalmmuse6
kosalmmuseBest one1
DBrizanall 2019Feb26
kosalmmuseBest one
DBrizanall 2019Feb25
kosalmmuseNice
kosalmmusehan
MsDale*52-Week Low
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK