Lampert’s auction bid for Sears approved
NEW YORK — Sears will live on, at least for now.
The company’s chairman and largest shareholder, Eddie Lampert, won a bankruptcy auction for Sears, averting liquidation of the iconic chain, according to a source familiar with the negotiations. The person agreed to speak on condition of anonymity because they were not authorized to discuss the negotiation publicly.
Lampert, who steered the company into Chapter 11 bankruptcy protection in October, is aiming to keep open roughly 400 stores and preserve tens of thousands of jobs.
But how long Sears can survive under the 56-yearold billionaire, who has tried and failed to turn around the company many times before, remains an open question. Competitors like Amazon, Target and Walmart also pose challenges that the struggling retailer has so far been unable to overcome.
“While there’s 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,” said Neil Saunders, managing director of Globaldata Retail. “In our view, Sears exits this process with almost as many problems as it had when it entered bankruptcy protection. In essence, its hand has not changed, and the cards it holds are not winning ones.”
The operator of Sears and Kmart had 687 stores and 68,000 workers at the time of its bankruptcy filing. At its peak in 2012, its stores numbered 4,000.
Lampert, the only one to put out a bid for the whole company, had sweetened his offer to more than $5 billion the last few days through an affiliate of his hedge fund ESL after his original bid had been rejected by the Sears board. That included assuming certain liabilities like covering bills to vendors of up to $166 million. Details of the final terms couldn’t be learned.
The plan is not a done deal and must be approved at a hearing on Feb. 1 by a bankruptcy judge.
Lampert, who gave up the CEO title when the Sears filed for Chapter 11, has maintained there’s still potential for the company. But he has yet to spell out details of how he plans to turn it around.
Lampert personally owns 31 percent of the Sears’ outstanding shares, and his hedge fund has an 18.5 percent stake, according to Factset.
Lampert stands to realize a big tax gain keeping Sears alive, using the company’s years of net operating losses to offset future taxable income if one of his other companies takes over the chain, said David Tawil, president and co-founder of Maglan Capital, which follows distressed companies.
If Lampert’s bid to save Sears gets final approval, he will need to dramatically reinvent the business. That means revitalizing aging stores and focusing on major appliance and tools that once were the jewels of the company, say industry analysts. Walmart, Target and others have been heavily investing in their own stores and expanding online, in large part because they have the capital to keep spending.