Sears Hometown and Outlet to be acquired by Transform Holdco for $2.25 per share
Transform Holdco announced that they have entered into a definitive merger agreement whereby Transform will acquire the outstanding shares of Sears Hometown not owned by ESL Investments and its affiliates for a price of $2.25 per share in cash, subject to an upward adjustment in the event a sale of Sears Hometown's Outlet Segment has occurred that satisfies criteria specified in the merger agreement. ESL Investments, Inc. and its affiliates, the majority owners of Transform, presently hold 58% of the outstanding shares of Sears Hometown. Under the terms of the merger agreement, Sears Hometown has a specified period of time in which it can market and sell its Sears Outlet and Buddy's Home Furnishing Stores businesses to a third party for not less than $97.5M. If the Outlet Segment is sold in accordance with the terms of the merger agreement, it will not be acquired by Transform in the acquisition of Sears Hometown. At the completion of the acquisition of Sears Hometown, each share of Sears Hometown's outstanding common stock not owned by ESL Investments, Inc. and its affiliates will be converted into the right to receive a base amount in 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, this base amount will be subject to an upward adjustment equal to the excess, if any, of the net proceeds received by Sears Hometown as a result of any sale of the Outlet Segment over $97.5M, divided by the aggregate number of shares of Sears Hometown common stock and unvested Sears Hometown restricted stock units issued and outstanding as of the closing of the merger transaction. Sears Hometown must enter into an agreement to sell the Outlet Segment no later than August 24, and the sale must be completed by October 23. Under the terms of the Merger Agreement, Transform will have the opportunity to match the economic terms of any proposed sale of the Outlet Segment to a third party that is expected to result in net proceeds to Sears Hometown of less than $120M.