Outlet stores

Transform Holdco LLC to Acquire Sears Hometown and Outlet Stores, Inc.


All-cash transaction will reunite the Sears family of stores

The acquisition is subject to a commercialization process and possible sale prior to the merger of the point of sale segment to a third party

HOFFMAN DOMAINS, Illinois., June 3, 2019 / PRNewswire / – Transform Holdco LLC (“Transform” or “the New Sears”), a leading integrated retailer and headquarters of Sears and Kmart, and Sears Hometown and Outlet Stores, Inc. (“Sears Hometown”) (NASDAQ) : SHOS) today announced that it has entered into a definitive merger agreement under which Transform will acquire the outstanding shares of Sears Hometown not owned by ESL Investments, Inc. and its affiliates for a price of $ 2.25 per share in cash, subject to an upward adjustment upon a sale of the Outlet segment of Sears Hometown that meets the criteria specified in the merger agreement. ESL Investments, Inc. and its affiliates, the majority owners of Transform, currently own 58% of the outstanding shares of Sears Hometown.

The transaction will reunite Sears and Kmart with Sears Hometown, which was a spin-off of Sears Holdings Corporation, the former parent company of Sears and Kmart, in 2012. Having these companies jointly owned will accelerate Transform’s strategy to grow its business. smaller store format by adding Sears Hometown Stores. It will also expand the company’s footprint as a multi-channel business that can serve customers through a variety of shopping experiences to meet their needs, ensure the growth of Transform’s renowned brands including Kenmore® and DieHard®, and increase opportunities for Sears Home Services and Financial Services Companies, as well as the Shop Your Way® rewards and social shopping destinations program.

Edward S. Lampert, President of Transform, said, “We are delighted to bring Sears Hometown, its associates and its network of independent dealers and franchisees back into the Sears and Kmart family. Our investment demonstrates our commitment to develop Transform for the benefit of our members and customers, associates, suppliers and communities across the country. While initially businesses will operate independently, we see many opportunities where we can partner together to better serve our customers and take advantage of efficiencies of scale once these businesses are under one roof.

Will powell, CEO and President of Sears Hometown and Outlet Stores, said, “I believe this is the best way forward for Sears Hometown and serves the interests of all of our constituents including our customers, associates, dealers, franchisees and shareholders. We believe that merging our Sears Hometown segment stores with Transform’s full line of Sears stores will result in a more consistent customer experience across Sears branded storefronts, generate higher total revenues, and leverage cost savings. ‘scale to improve costs and margins, which could result in improved profitability for Sears Hometown dealers and franchisees.

Sears Hometown currently operates a network of 491 Hometown stores and 126 Outlet stores located in 49 states, Porto Rico and Bermuda and generated $ 1.4 billion net sales in 2018. When the two companies are combined, they will rank third among appliance retailers in United States in terms of sales.

Pursuant to the merger agreement, Sears Hometown has a specified period during which it may market and sell its Sears Outlet and Buddy’s Home Furnishing Stores businesses (together, the “Outlet Segment”) to a third party for at least $ 97.5 million. If the Outlet segment is sold in accordance with the terms of the merger agreement, it will not be acquired by Transform as part of the Sears Hometown acquisition.

Upon completion of the Sears Hometown Acquisition, each outstanding common share of Sears Hometown not owned by ESL Investments, Inc. and its affiliates will be converted into the right to receive a base amount of cash equal to $ 2.25 per share. If Sears Hometown completes a sale of the Outlet segment in accordance with the terms of the merger agreement, such base amount will be subject to an upward adjustment equal to (i) the excess, if any, of the net proceeds received by Sears Hometown as resulting from any sale of the Outlet segment on $ 97.5 million, divided by (ii) the aggregate number of Sears Hometown common shares and unvested Sears Hometown Restricted Share Units issued and outstanding at the closing of the Merger Transaction. Sears Hometown must enter into an agreement to sell the Outlet segment at the latest August 24, 2019 (extendable by 10 days under specified circumstances) and the sale must be concluded by 23 october 2019 (extendable by 15 days in certain circumstances). Under the merger agreement, Transform will have the ability to match the economic terms of any proposed sale of the Outlet segment to a third party that is expected to generate net proceeds for Sears Hometown of less than $ 120 million.

Will powell, CEO and President of Sears Hometown and Outlet Stores, said, “As we have publicly announced, the Outlet business is profitable and has a unique business strategy that should enable further growth. We are now entering the process of selling the Outlet segment with interested parties, while continuing to operate the Outlet stores without any disruption in business. ”

“We will be working with Transform over the next few months to ensure that our dealer network is able to make the most of Transform’s unique brands, services and online capabilities to deliver additional value to their customers. “

The transaction was negotiated and approved by a special committee of the board of directors of Sears Hometown, composed of an independent and disinterested director.

The transaction is expected to close in the third quarter of Sears Hometown of 2019, when Sears Hometown will cease to be a public company.

Cleary Gottlieb Steen & Hamilton LLP is legal counsel to Transform Holdco LLC. Shearman & Sterling LLP is acting as legal advisor and PJ SOLOMON is acting as financial advisor to the Sears Hometown Special Committee.

About Transform Holdco LLC
Transform Holdco LLC is a leading integrated retailer focused on seamlessly connecting digital and physical shopping experiences to serve its members – where, when and how they want to shop. Transform Holdco hosts Shop Your Way®, a social shopping platform that offers members rewards for their purchases at Sears, Kmart and other retail partners. Transform Holdco operates through its subsidiaries with full and specialty retail stores across United States.

About Sears Hometown and Outlet Stores, Inc.
Sears Hometown and Outlet Stores, Inc. is a national retailer primarily focused on the sale of appliances, hardware, lawn and garden tools and equipment. Its Hometown stores (which include its Hometown stores, hardware stores, and home appliance showrooms) are designed to provide customers with in-store and online access to a wide selection of national brands of home appliances, appliances, and home appliances. ‘tools, lawn and garden equipment. , sporting goods and household goods, depending on the particular format. Over 90% of its Hometown stores are operated by independent local dealers or franchisees.

Its outlet stores are designed to provide its customers with in-store and online access to new, unique, non-cardboard, abandoned, repackaged, overstocked, scratched and dented products in a wide assortment of merchandise categories. , including household appliances, lawn and garden equipment, clothing, mattresses, sporting goods and tools at prices significantly below list prices.

Forward-looking statements:

This new press release contains forward-looking statements. Statements preceded or followed by, or which otherwise include, the words “believe”, “expect”, “anticipate”, “intend”, “project”, “” “” and similar expressions or future or conditional verbs such as “will”, “may”, “should”, “should” and “could” are generally prospective in nature and not historical facts. Forward-looking statements are subject to material risks, uncertainties and assumptions, including, but not limited to, the requirement to meet the closing conditions set forth in the merger agreement, the result of any proceeding. legal action that may be brought against Sears Hometown and others related to the transaction, and the ability to retain specified key employees of Sears Hometown, who may, individually or in combination, ensure that the results, performance and actual achievements in the future are materially different from future results, future performance and future achievements expressed or implied by the forward-looking statements. Forward-looking statements include, without limitation, information regarding future financial performance, business strategies, plans, goals, beliefs, expectations and objectives. Forward-looking statements are based on the current beliefs and expectations of the parties and should be read in conjunction with other caveats, including “risk factors”, which are included in Sears Hometown’s Annual Report on Form 10-K for his fiscal year ended February 2, 2019 and in its other documents filed with the Securities and Exchange Commission and its other public announcements. While the parties believe their forecasts and assumptions are reasonable, they caution that actual results may differ materially. If one or more of these or other risks or uncertainties materialize, or if the parties’ underlying assumptions turn out to be incorrect, actual results may differ materially from what they expected. Therefore, actual events and results may differ materially from those included or contemplated or implied by forward-looking statements.

The forward-looking statements included in this press release are made only as of the date of this new press release. The parties do not undertake to update or publicly review any forward-looking statements made by or on their behalf, whether as a result of new information, future developments, subsequent events or circumstances, or otherwise. , unless required by law.

Additional information and where to find it

This new version concerns the proposed merger between Sears Hometown and Transform. Sears Hometown will prepare an information statement for its shareholders containing the information relating to the merger specified in Schedule 14C promulgated under the Securities Exchange Act of 1934, as amended, and describing the merger. Upon completion, a final disclosure statement will be mailed to Sears Hometown shareholders.

Investors are urged to carefully read the Merger Information Statement and any other relevant document in its entirety when available as it will contain important information about the Merger. You can obtain copies of all documents filed with the SEC relating to the merger free of charge from the SEC website, http://www.sec.gov, or from Sears Hometown by direct mail or telephone request to Sears Hometown and Outlet Stores, Inc. at 5500 Trillium Boulevard, Suite 501 Hoffman Estates, Illinois 60192, phone (847) 286-7000, Attention: General Counsel.

SOURCE Transform Holdco, LLC


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