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Fresh hope for Sears after chairman Eddie Lampert makes buyout offer

By Staff Correspondent |

It surprised many when Eddie Lampert, chairman of embattled retailer Sears (SHLD), Thursday came up with a fresh offer to acquire the department store chain for $4.6 billion. While the specifics of the revival strategy are not yet known, the offer could be the last chance for the company to escape bankruptcy.

Considering Sears’ shattered finances and huge debt, for Lampert, the only possible takeaway from the deal could be the goodwill of the iconic brand and those shareholders who stay optimistic about the company even after the recent delisting of its stock. If the proposal moves forward, Lampert will end up owning the whole of Sears, including its vast store network.

The offer would be in the best interest of the stakeholders if it prevents an outright liquidation and gives some hope to suppliers and lenders who are currently apprehensive about the future of the company. But it is unlikely to strengthen the business so much that it would emerge unscathed from the present crisis. In all probability, Lampert and his fund will become the only beneficiaries of the deal, practically leaving the shareholders with nothing to cheer about.

If the proposal moves forward, Lampert will end up owning the whole of Sears, including its vast store network

Meanwhile, it is unlikely that any party would try to outbid Lampert whose offer covers assumption of certain liabilities of Sears and its debt. Lampert, who has made similar offers in the past, is planning to carry out the acquisition through his hedge fund, hoping for a turnaround under a new leadership and corporate structure.

A section of market watchers is skeptical about the capability of the long-term leader, who lived through the ups and downs of the company, to rebuild it from scratch. Lampert, the majority shareholder in Sears who stepped down as its CEO two months ago, is often held responsible for the downfall, by taking a series of actions that drove the company to bankruptcy.

Sears stock plunges 25% as it nears possible bankruptcy

After being delisted from the Nasdaq stock exchange, when its value fell below one dollar, Sears’ stock started trading in the OTC market in October. Then, Lampert had made an effort to avoid bankruptcy by selling assets worth a few billion dollars and by seeking to have a part of the debt refinanced. With almost all of the outlets closed now, what is left of Sears is only its real estate, mainly comprising the store network.

 

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