Liberty Tax, Inc. (“Liberty Tax”) (OTC Pink: TAXA), the parent
company of Liberty Tax Service and Buddy’s Home Furnishings, and
Sears Hometown and Outlet Stores, Inc. (“Sears Hometown”) (NASDAQ:
SHOS) today announced that they have entered into a definitive
purchase agreement (the “Purchase Agreement”) whereby Liberty Tax
will acquire Sears Hometown’s Outlet business as well as its
Buddy’s Home Furnishings Stores (collectively, the “Sears Outlet
business”) in an all cash transaction valued at up to approximately
$132.9 million.
Liberty Tax intends to finance the transaction through a
combination of new debt, Liberty Tax’s balance sheet cash and/or an
equity contribution from an affiliate of Vintage Capital
Management, LLC (“Vintage”). In connection with the execution
of the purchase agreement, Liberty Tax entered into a debt
commitment letter with Guggenheim Credit Services, LLC, as
administrative agent and lead arranger, and clients managed by
Guggenheim Investments, the global asset management and investment
advisory business of Guggenheim Partners, and an equity commitment
letter with an affiliate of Vintage, each of which is subject to
customary conditions.
The sale of the Sears Outlet business (the “Sale”) is in
accordance with the terms of the agreement and plan of merger
between Sears Hometown and Transform Holdco LLC (“Transform”),
which was previously announced by Sears Hometown and Transform on
June 3, 2019 (the “Merger Agreement”). As a result of the
Sale, which is estimated to result in Net Proceeds (as defined in
the Merger Agreement) of approximately $121 million, the merger
consideration payable by Transform in the merger transaction for
the outstanding shares of Sears Hometown not owned by ESL
Investments, Inc. and its affiliates is estimated to be
approximately $3.25 per share in cash, an increase of approximately
$1.00, or approximately 44.4%, from the previously announced base
merger consideration of $2.25 per share. The actual increase,
if any, in the per share base merger consideration in the merger
transaction with Transform is dependent on the actual amount of Net
Proceeds realized by Sears Hometown in the Sale, which may be lower
than the current estimate. ESL Investments, Inc. and its
affiliates, the majority owners of Transform, presently hold
approximately 55.2% of the outstanding shares of Sears Hometown.
Concurrently with its entry into the Purchase Agreement,
Sears Hometown entered into a letter agreement with Transform and a
wholly owned subsidiary of Transform which, among other things,
provides that, subject to the satisfaction of certain conditions,
the merger will close substantially concurrently with the closing
of the Sale.
Both the Sale and the terms of the Purchase Agreement have been
unanimously approved by the Boards of Directors of both Liberty Tax
and Sears Hometown, and have also been approved by the Special
Committee of the Sears Hometown Board of Directors. The Sale
and the merger between Sears Hometown and Transform are each
expected to close in October 2019, subject to the satisfaction of
specified conditions. In addition, Buddy’s Newco, LLC
(“Buddy’s”), a wholly owned subsidiary of Liberty Tax, has acquired
41 Buddy’s Home Furnishings stores from A-Team Leasing, an existing
Buddy’s Home Furnishings franchisee. In connection with its
sale of these Buddy’s Home Furnishings stores to Liberty Tax,
A-Team Leasing intends to become a franchisee of five Sears Outlet
locations, with this franchising transaction expected to become
effective concurrently with the Sale. Liberty Tax’s
acquisition of the 41 Buddy’s Home Furnishings stores from A-Team
Leasing was financed, in part, through approximately $23 million of
additional borrowings under the existing secured credit facility of
Buddy’s.
The acquisition of Sears Outlet is an important step forward in
the evolution of Liberty Tax’s strategic objectives, as it follows
the July 2019 acquisition of Buddy’s Home Furnishings and the
proposed acquisition of The Vitamin Shoppe, Inc. (“Vitamin Shoppe”)
announced earlier in August. This unique portfolio of Sears Outlet
retail stores and distribution capabilities will add complementary
products and sales channels and enable Liberty Tax to offer high
quality home goods to consumers across the nation, while also
offering unique value propositions. Upon the closing of the Sale,
Liberty Tax’s store portfolio will include several hundred retail
locations with a combination of company operated and franchisee
operated stores.
Andrew Laurence, Chairman of Liberty Tax’s Board of Directors,
said, “We are excited about the acquisition of Sears Outlet and its
unique model that offers its customers in-store and online access
to outlet-value products across a broad assortment of merchandise
categories, while serving as a valuable supply chain partner for
its vendors. This is a continuation of Liberty Tax’s strategy
of identifying and acquiring franchised or franchisable businesses
while also building scale at attractive acquisition
valuations. It’s an exciting time for Liberty Tax and its
shareholders as we begin to recognize the strength in our
future-facing franchise business model.”
Will Powell, Chief Executive Officer and President of Sears
Hometown, said “The Sears Outlet business is a profitable business
with a unique business strategy that, as part of the dynamic
Liberty Tax group of companies, is expected to generate future
growth.”
Shearman & Sterling LLP acted as legal counsel to the
Special Committee of the Sears Hometown Board of Directors and PJ
Solomon acted as its financial advisor.
About Liberty Tax, Inc.
Liberty Tax, Inc. (OTC PINK: TAXA) is the indirect parent
company of Liberty Tax Service and Buddy’s Home Furnishings and
expects to acquire Vitamin Shoppe in the third or fourth quarter of
2019. In the U.S. and Canada, last year, Liberty Tax prepared
approximately two million individual income tax returns in more
than 3,100 offices and online. Liberty Tax also owns Buddy’s Home
Furnishings, a specialty retailer engaged in the business of
leasing and selling consumer electronics, residential furniture,
appliances and household accessories. Liberty Tax is focused on the
evaluation and acquisition of franchise-oriented or complementary
businesses. Liberty Tax also supports local communities with
fundraising endeavors and contributes as a national sponsor to many
charitable causes.
About Sears Hometown and Outlet Stores,
Inc.
Sears Hometown and Outlet Stores, Inc. is a national retailer
primarily focused on selling home appliances, hardware, tools and
lawn and garden equipment. Its Hometown stores (which includes its
Hometown Stores, its Hardware Stores, and its Home Appliance
Showrooms) are designed to provide its customers with in-store and
online access to a wide selection of national brands of home
appliances, tools, lawn and garden equipment, sporting goods and
household goods, depending on the particular format. More than 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, one-of-a kind, out-of-carton,
discontinued, reconditioned, overstocked, and scratched and dented
products across a broad assortment of merchandise categories,
including home appliances, lawn and garden equipment, apparel,
mattresses, sporting goods and tools at prices that are
significantly lower than list prices.
About Guggenheim
Investments
Guggenheim Investments (“Guggenheim”) is the global asset
management and investment advisory division of Guggenheim Partners,
with more than $209 billion1 in total assets under management
across fixed income, equity, and alternative strategies. Guggenheim
focuses on the return and risk needs of insurance companies,
corporate and public pension funds, sovereign wealth funds,
endowments and foundations, consultants, wealth managers, and
high-net-worth investors. Guggenheim’s 300+ investment
professionals perform rigorous research to understand market trends
and identify undervalued opportunities in areas that are often
complex and underfollowed. This approach to investment management
has enabled Guggenheim to deliver innovative strategies providing
diversification and attractive long-term results.
Forward-Looking StatementsThis press release
contains “forward-looking” statements within the meaning of Section
27A of the Securities Act of 1933, as amended, Section 21E of the
Securities Exchange Act of 1934, as amended, and the Private
Securities Litigation Reform Act of 1995, as amended, including,
without limitation, those that contain, or are identified by, words
such as “outlook”, “guidance”, “believes”, “expects”, “potential”,
“continues”, “may”, “will”, “should”, “predicts”, “intends”,
“plans”, “estimates”, “anticipates”, “could” or the negative
version of these words or other comparable words. Forward-looking
statements may include, but are not limited to, statements relating
to the proposed transaction between Sears Hometown and Liberty
Tax. These statements are subject to various significant risks and
uncertainties, many of which are outside of the control of Sears
Hometown and Liberty Tax, including, among others, the risk
that the proposed transaction may not be completed in a timely
manner or at all, which may adversely affect the business and the
stock price of Sears Hometown and/or Liberty Tax; risks
related to the occurrence of any event, change or other
circumstance that could give rise to the termination of the
purchase agreement or the failure to satisfy any of the conditions
to the completion of the proposed transaction; the calculation of
Net Proceeds under the Merger Agreement and any adjustment to the
merger consideration under the Merger Agreement as a consequence
thereof; the effect of the announcement or pendency of the proposed
transaction on the ability of Sears Hometown or Liberty
Tax to retain and hire key personnel and maintain
relationships with its customers, suppliers, partners and others
with whom they do business, or on their respective operating
results and business generally; risks associated with the diversion
of management’s attention from ongoing business operations due to
the proposed transaction; legal proceedings related to the proposed
transaction; uncertainties as to Liberty Tax’s ability to obtain
financing in order to consummate the proposed transaction; costs,
charges or expenses resulting from the proposed transaction; the
franchising of the Sears Outlet business, including to A-Team
Leasing; and the ability of Liberty Tax to implement and
execute on its franchise-centric business model. Actual results may
differ materially from anticipated results or outcomes discussed in
any forward-looking statement. Additional factors that could cause
actual results to differ materially from forward-looking statements
include the strength of the economy; changes in the overall level
of consumer spending; the performance of the products and services
of Sears Hometown and Liberty Tax within the prevailing
retail or other business environment; implementation of the
strategy of Sears Hometown and Liberty Tax; management
changes; maintaining appropriate levels of inventory; changes in
tax policy; ecommerce relationships; disruptions of repair and
distribution facilities or information systems; other specific
factors discussed herein and in other United States Securities
and Exchange Commission (the "SEC") filings by Sears Hometown
and Liberty Tax (including their respective reports on
Forms 10-K and 10-Q filed with the SEC). The
forward-looking statements are based upon the current beliefs and
expectations of the managements of Liberty Tax and Sears Hometown
and should be read in conjunction with the other cautionary
statements, including “Risk Factors” that are included in SEC
filings by Liberty Tax and Sears Hometown. Sears Hometown
and Liberty Tax believe that all forward-looking
statements are based on reasonable assumptions when made; however,
Sears Hometown and Liberty Tax caution that it is impossible
to predict actual results or outcomes or the effects of risks,
uncertainties or other factors on anticipated results or outcomes
with certainty and that, accordingly, one should not place undue
reliance on these statements. Forward-looking statements speak only
as of the date when made and neither Sears Hometown
nor Liberty Tax undertakes any obligation to update these
statements in light of subsequent events or developments.
Additional Information and Where to Find It
This communication is being made in respect of the proposed Sale
and the separately proposed merger involving Sears Hometown and
Transform. In connection with the merger, Sears Hometown
filed with the SEC, on July 26, 2019, a preliminary information
statement for its stockholders containing the information with
respect to the merger and the transactions contemplated to be
entered into in connection therewith required in Schedule 14C
promulgated under the Securities Exchange Act of 1934, as amended,
and describing, among other things, the merger and the transactions
contemplated to be entered into in connection therewith. The
information in the preliminary information statement is not
complete and may be changed. When completed, the definitive
information statement will be mailed to Sears Hometown’s
stockholders.
Investors are urged to carefully read the information statement
regarding the merger, the transactions contemplated to be entered
into in connection therewith (including the proposed Sale) and any
other relevant documents in their entirety when they become
available because they will contain important information about the
merger and the transactions contemplated to be entered into in
connection therewith (including the proposed Sale). You may
obtain copies of all documents filed with the SEC regarding the
merger, free of charge, at the SEC’s website, http://www.sec.gov,
or from Sears Hometown by directing a request by mail or telephone
to Sears Hometown and Outlet Stores, Inc. at 5500 Trillium
Boulevard, Suite 501, Hoffman Estates, Illinois 60192, telephone
(847) 286-7000, Attention: General Counsel.
Contacts
For Liberty Tax, Inc.
Investors: Michael S. Piper Chief Financial
Officer Liberty Tax Service (757) 493-8855
investorrelations@libtax.com For Sears Hometown and Outlet
Stores, Inc. Public Relations Mandi
Gualtieri (847) 945-1300agualtieri@fishmanpr.com
For Sears Hometown and Outlet Stores, Inc.
Investors: E.J. BirdChief Financial Officer
(847) 286-8650 ebird1@shos.com
__________________________
1 Guggenheim Investments assets under management
figure is as of 6.30.2019 and includes $11.2 billion of leverage.
Guggenheim Investments represents the following affiliated
investment management businesses of Guggenheim Partners, LLC:
Guggenheim Partners Investment Management, LLC, Security Investors,
LLC, Guggenheim Funds Investment Advisors, LLC, Guggenheim Funds
Distributors, LLC, GS GAMMA Advisors, LLC, Guggenheim Partners
Europe Limited and Guggenheim Partners India Management.
Sears Hometown and Outle... (NASDAQ:SHOS)
Historical Stock Chart
From Aug 2024 to Sep 2024
Sears Hometown and Outle... (NASDAQ:SHOS)
Historical Stock Chart
From Sep 2023 to Sep 2024