Sears CEO's Hedge Fund Wants To Buy Kenmore, Other Assets

HOFFMAN ESTATES, IL — ESL Investments, the hedge fund operated by Sears CEO Edward Lampert, is making a run at buying the struggling retailer's Kenmore appliance brand, as well as parts of it's Sears Home Services division and certain real estate holdings. The fund expressed its interest in acquiring the assets in a letter Monday to the board of directors of Sears Holdings Corp., the Hoffman Estates-based company said in a statement.

"We continue to see value in Sears and its underlying assets and believe strongly that with an appropriate runway Sears will be able to complete its transformation to respond to the challenging retail environment," the letter from ESL Investments stated. "We also are of the view that the portfolio of Sears' assets has substantial value that is not being reflected in the capital markets or being maximized under the current organizational structure."

Kenmore and the home services division have been for sale for the past two years, but Sears has been unable to strike a deal with potential buyers, the letter stated. The Sears Home Improvement and PartsDirect businesses — the parts of the home services division ESL Investments is interested in acquiring — is valued at $500 million, according to the retailer. The estimated value of Kenmore was not given.

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Although ESL is interested in buying these assets, its primary concern is to see them "divested in the near term at a full and fair value, regardless of whether ESL or a third party is the ultimate buyer, so that Sears is able to improve its debt profile and liquidity position," the letter from the hedge fund stated. If ESL is to buy these assets from Sears, it must get the approval of its board first.

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