VIRGINIA BEACH, Va. and
HOFFMAN ESTATES, Ill.,
Aug. 27, 2019 /PRNewswire/ -- 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 Statements
This 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.
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.
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SOURCE Sears Hometown and Outlet Stores, Inc.