Sears Hometown & Outlet Stores (SHOS) Inactive
Filed: 13 Sep 19, 7:46am
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE13E-3
RULE13e-3 TRANSACTION STATEMENT UNDER SECTION 13(e)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
(Amendment No. 2)
Sears Hometown and Outlet Stores, Inc.
(Name of Issuer)
SEARS HOMETOWN AND OUTLET STORES, INC.
TRANSFORM HOLDCO LLC
TRANSFORM MERGER CORPORATION
ESL PARTNERS, L.P.
ESL INVESTMENTS, INC.
EDWARD S. LAMPERT
RBS PARTNERS, L.P.
(Names of Person(s) Filing Statement)
COMMON STOCK
(Title of Class of Securities)
812362101
(CUSIP Number of Class of Securities)
Luke J. Valentino Transform Holdco LLC 333 Beverly Road Hoffman Estates, IL 60179 (847)286-2500 | Charles J. Hansen Sears Hometown and Outlet Stores, Inc. 5500 Trillium Boulevard, Suite 501 Hoffman Estates, Illinois 60192 (847)286-7000 |
(Name, address and telephone number of person authorized to receive notices and communications on behalf of filing persons)
With Copies to:
Benet J. O’Reilly Neil R. Markel Cleary Gottlieb Steen & Hamilton LLP One Liberty Plaza New York, New York 10006 | Creighton O’M. Condon Rory B. O’Halloran Cody L. Wright Shearman & Sterling LLP 599 Lexington Avenue New York, New York 10022 |
This statement is filed in connection with (check the appropriate box):
☒ | a. | The filing of solicitation materials or an information statement subject to Regulation 14A, Regulation 14C or Rule13e-3(c) under the Securities Exchange Act of 1934. | ||
☐ | b. | The filing of a registration statement under the Securities Act of 1933. | ||
☐ | c. | A tender offer. | ||
☐ | d. | None of the above. | ||
Check the following box if the soliciting materials or information statement referred to in checking box (a) are preliminary copies:
Check the following box if the filing is a final amendment reporting the results of the transaction ☐
CALCULATION OF FILING FEE
| Transaction Valuation* | Amount of Filing Fee** | |
| $35,910,423.25 | $4,352.34 | |
| * | The transaction valuation is estimated solely for purposes of calculating the filing fee. The transaction valuation was determined based upon 11,049,361 shares of common stock (being 22,702,132 shares of common stock plus 781,618 restricted stock units issued and outstanding minus 12,434,389 shares of common stock beneficially owned in the aggregate by ESL Partners, L.P. and Edward S. Lampert (which excludes 5,820 shares of common stock held by ESL Partners, L.P. in separate accounts on behalf of, and for the benefit of, redeeming limited partners of ESL Partners, L.P.) as of September 4, 2019) multiplied by the estimated maximum per share Merger Consideration of $3.25. |
| ** | In accordance with Section 14(g) of the Securities Exchange Act of 1934, as amended, and Rule0-11(c)(1) promulgated thereunder, the filing fee was determined by multiplying 0.0001212 by the aggregate merger consideration. |
| ☒ | Check the box if any part of the fee is offset as provided by Rule0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
| Amount previously paid: $2,797.13 | Filing Party: Sears Hometown and Outlet Stores, Inc. | |
| Form or registration No.: Schedule 14C | Date Filed: July 26, 2019 | |
| Amount previously paid: $1,555.21 | Filing Party: Sears Hometown and Outlet Stores, Inc. | |
| Form or registration No.: Schedule 14C | Date Filed: September 4, 2019 | |
INTRODUCTION
This Amendment No. 2 (this “Amendment No. 2”) to the Transaction Statement on Schedule13E-3 (as amended by this Amendment No. 2, this “Transaction Statement”), together with the exhibits hereto, is being filed by (i) Sears Hometown and Outlet Stores, Inc., a Delaware corporation (the “Company”), (ii) Transform Holdco LLC, a Delaware limited liability company (“Transform”), (iii) Transform Merger Corporation, a Delaware corporation (“Merger Subsidiary”), (iv) ESL Partners, L.P., a Delaware limited partnership (“Partners”), (v) RBS Partners, L.P., a Delaware limited partnership (“RBS”), (vi) ESL Investments, Inc., a Delaware corporation (“ESL Investments”), and (vii) Edward S. Lampert, a United States citizen (each of (i) through (vii), a “Filing Person”). The Company has filed, concurrently with the filing of this Amendment No. 2, a definitive information statement on Schedule 14C (as amended, the “Information Statement”). A copy of the Information Statement is attached hereto as Exhibit (a)(1) and a copy of the Merger Agreement (as defined below) is attached as Annex A to the Information Statement. All references in this Transaction Statement to Items numbered 1001 to 1016 are references to Items contained in RegulationM-A promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
This Transaction Statement relates to the Agreement and Plan of Merger, dated as of June 1, 2019 (the “Merger Agreement”), among the Company, Transform and Merger Subsidiary, pursuant to which Merger Subsidiary will merge with and into the Company (the “Merger”). Prior to completion of the Merger, the Company has been afforded an opportunity to market and sell the Company’s Sears Outlet and Buddy’s Home Furnishing Stores businesses to a third party (an “Outlet Sale”). On August 27, 2019, the Company entered into an Equity and Asset Purchase Agreement (the “Liberty Purchase Agreement”) with Franchise Group Newco S, LLC (the “Outlet Purchaser”) and, solely for purposes of a performance and payment guarantee on behalf of the Outlet Purchaser, Liberty Tax, Inc., to effect an Outlet Sale to the Outlet Purchaser (the “Liberty Sale”). A copy of the Liberty Purchase Agreement is attached as Annex B to the Information Statement.
If the Merger is completed, each share of common stock, par value $0.01, of the Company (“Company Common Stock”) issued and outstanding immediately prior to the effective time of the Merger (except for shares (i) owned by the Company as treasury stock or by any subsidiary of either the Company or Transform, (ii) owned by ESL Investments or its investment affiliates, including Edward S. Lampert (together, “ESL”), or Transform, or (iii) held by stockholders who are entitled to demand and who properly demand appraisal under Section 262 of the General Corporation Law of the State of Delaware (the “DGCL”) for such shares) will be cancelled and converted automatically into the right to receive $2.25 in cash, without interest, subject to an upward adjustment (as described in more detail in the Information Statement) in the event that the Liberty Sale is completed prior to the closing of the Merger (the “Merger Consideration”). If the Liberty Sale is consummated prior to the closing of the Merger, it is currently estimated to result in Merger Consideration of approximately $3.25 per share of Company Common Stock, although such amount could be lower under certain circumstances, as described more fully in the Information Statement. Any payment of the Merger Consideration will be subject to any required withholding taxes.
Under Section 251 of the DGCL and the applicable provisions of the Company’s Certificate of Incorporation (as amended) and Amended and Restated Bylaws, the adoption of the Merger Agreement by the Company’s stockholders required the affirmative vote or written consent of the holders of a majority of the outstanding shares of Company Common Stock. On June 1, 2019, immediately following execution of the Merger Agreement, Edward S. Lampert and Partners (together, the “Principal Stockholders”) caused to be delivered to the Company an irrevocable written consent (the “Written Consent”) adopting and approving the Merger Agreement and the transactions contemplated thereby, including the Merger, and approving any Outlet Sale to the extent such Outlet Sale would constitute a sale of substantially all of the Company’s property and assets and be subject to the stockholder approval requirements of Section 271(a) of the DGCL (a “Section 271 Sale”), in respect of 13,226,598 shares of Company Common Stock, representing approximately 58.3% of the outstanding shares of Company Common Stock entitled to act by written consent with respect to the adoption of the Merger Agreement and any Outlet Sale. Accordingly, the adoption and approval of the Merger Agreement and the transactions contemplated thereby, including the Merger, and any Outlet Sale, became effective on June 1, 2019. No further approval of the stockholders of the Company is required to adopt or approve the Merger Agreement or the transactions contemplated thereby, including the Merger, or any Outlet Sale. A copy of the Written Consent is attached as Annex D to the Information Statement and incorporated by reference hereto as Exhibit (d)(4).
In connection with the Company’s entry into the Liberty Purchase Agreement, the Principal Stockholders executed and delivered to the Company an irrevocable written consent (the “Liberty Consent”) confirming the Principal Stockholders’ approval of an Outlet Sale consummated in all material respects in accordance with the terms set forth in the Liberty Purchase Agreement, to the extent such sale constitutes a Section 271 Sale, in respect of 12,535,679 shares of Company Common Stock, representing approximately 55.2% of the outstanding shares of Company Common Stock entitled to act by written consent with respect to the adoption of the Liberty Sale. A copy of the Liberty Consent is attached as Annex E to the Information Statement and incorporated by reference hereto as Exhibit (d)(6).
Pursuant to General Instruction F to Schedule13E-3, the information in the Information Statement, including all annexes thereto, is expressly incorporated herein by reference in its entirety, and responses to each item herein are qualified in their entirety by the information contained in the Information Statement. Thecross-references below are being supplied pursuant to General Instruction G to Schedule13E-3 and show the location in the Information Statement of the information required to be included in response to the items of Schedule13E-3. As of the date hereof, the Information Statement is in preliminary form and is subject to completion. Terms used but not defined in this Transaction Statement shall have the meanings given to them in the Information Statement.
All information contained in, or incorporated by reference into, this Transaction Statement concerning each Filing Person has been supplied by such Filing Person.
Item 1. Summary Term Sheet
RegulationM-A Item 1001
Summary Term Sheet. The information set forth under the following captions in the Information Statement is incorporated herein by reference:
“Summary Term Sheet”
“Questions and Answers about the Merger and the Liberty Sale”
Item 2. Subject Company Information
RegulationM-A Item 1002
| (a) | Name and Address. The information set forth under the following captions in the Information Statement is incorporated herein by reference: |
“Summary Term Sheet—Parties Involved in the Merger—Sears Hometown and Outlet Stores, Inc.”
“Parties Involved in the Merger—Sears Hometown and Outlet Stores, Inc.”
“Important Additional Information Regarding the Company—About the Company and its Business”
| (b) | Securities. The information set forth under the following captions in the Information Statement is incorporated herein by reference: |
“Summary Term Sheet—Parties Involved in the Merger—Sears Hometown and Outlet Stores, Inc.”
“Parties Involved in the Merger—Sears Hometown and Outlet Stores, Inc.”
“Important Additional Information Regarding the Company—Security Ownership of Certain Beneficial Owners and Management”
| (c)-(d) | Trading Market and Price; Dividends. The information set forth under the following captions in the Information Statement is incorporated herein by reference: |
“Summary Term Sheet—Market Price of Company Common Stock and Dividend Data”
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“Important Additional Information Regarding the Company—Market Prices and Dividend Data”
| (e) | Prior Public Offerings. Not applicable. |
| (f) | Prior Stock Purchases. On November 8, 2017, Mr. Lampert acquired 219,989 shares of Company Common Stock for an aggregate purchase price of $329,983.50 (excluding commissions) or approximately $1.50 per share on average, using personal funds. On December 8, 2017, Mr. Lampert acquired 95,156 shares of Company Common Stock for an aggregate purchase price of $137,976.20 (excluding commissions) or approximately $1.45 per share on average, using personal funds. |
Item 3. Identity and Background of Filing Persons
RegulationM-A Item 1003
| (a)-(b) | Name and Address; Business and Background of Entities. The information set forth under the following captions in the Information Statement is incorporated herein by reference: |
“Summary Term Sheet—Parties Involved in the Merger”
“Parties Involved in the Merger”
“Important Additional Information Regarding the Company—About the Company and its Business”
“Important Additional Information Regarding the Company—Directors and Executive Officers”
“Important Additional Information Regarding the ESL Filing Parties—Information on Entities”
“Important Additional Information Regarding the ESL Filing Parties—Information on Natural Persons”
| (c) | Business and Background of Natural Persons. The information set forth under the following captions in the Information Statement is incorporated herein by reference: |
“Important Additional Information Regarding the Company—Directors and Executive Officers”
“Important Additional Information Regarding the ESL Filing Parties—Information on Natural Persons”
Item 4. Terms of the Transaction
RegulationM-A Item 1004
| (a) | Material Terms. The information set forth under the following captions in the Information Statement is incorporated herein by reference: |
“Summary Term Sheet”
“Questions and Answers about the Merger and the Liberty Sale”
“Special Factors—Recommendation of the Special Committee and Reasons for Recommendation”
“Special Factors—Recommendation of the Board of Directors and Reasons for Recommendation”
“Special Factors—Position of ESL on the Fairness of the Merger”
“Special Factors—Purposes and Reasons of the Company in Connection With the Merger”
“Special Factors—Purposes and Reasons of the ESL Filing Parties in Connection With the Merger”
“Special Factors—Certain Effects of the Merger”
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“Special Factors—Material U.S. Federal Income Tax Consequences of the Merger”
“Special Factors—Anticipated Accounting Treatment of the Merger”
“The Merger Agreement”
“Annex A: Merger Agreement”
“Annex F: Liberty Sale Letter Agreement”
| (c) | Different Terms. The information set forth under the following captions in the Information Statement is incorporated herein by reference: |
“Summary Term Sheet—Interests of Directors and Executive Officers in the Merger”
“Summary Term Sheet—Merger Consideration”
“Summary Term Sheet—Treatment of the Company’s Equity Awards and Other Incentive Compensation”
“Questions and Answers about the Merger and the Liberty Sale”
“Special Factors—Certain Effects of the Merger”
“Special Factors—Interests of Directors and Executive Officers in the Merger”
“The Merger Agreement—The Merger Consideration”
“The Merger Agreement—Treatment of the Company’s Equity Awards and Other Incentive Compensation”
“The Merger Agreement—Other Covenants and Agreements”
“Annex A: Merger Agreement”
“Annex F: Liberty Sale Letter Agreement”
| (d) | Appraisal Rights. The information set forth under the following captions in the Information Statement is incorporated herein by reference: |
“Summary Term Sheet—Appraisal Rights”
“Questions and Answers about the Merger and the Liberty Sale”
“The Merger Agreement—Merger Consideration”
“The Merger Agreement—Effect of the Merger on Company Common Stock”
“The Merger Agreement—Appraisal Rights”
“Appraisal Rights”
“Annex H: Section 262 of the General Corporation Law of the State of Delaware”
| (e) | Provisions for Unaffiliated Security Holders. None |
| (f) | Eligibility for Trading. Not applicable. |
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Item 5. Past Contacts, Transactions, Negotiations and Agreements.
RegulationM-A Item 1005
| (a) | Transactions. The information set forth under the following captions in the Information Statement is incorporated herein by reference: |
“Special Factors—Background of the Transaction”
“Important Additional Information Regarding the Company—Relationships and Transactions with Related Persons”
| (b)-(c) | Significant Corporate Events; Negotiations or Contacts. The information set forth under the following captions in the Information Statement is incorporated herein by reference: |
“Summary Term Sheet—The Merger”
“Summary Term Sheet—ESL Letter Agreement”
“Summary Term Sheet—The Written Consents of Stockholders”
“Summary Term Sheet—Source and Amount of Funds”
“Questions and Answers about the Merger and the Liberty Sale”
“Special Factors—Background of the Transaction”
“Special Factors—Recommendation of the Special Committee and Reasons for Recommendation”
“Special Factors—Recommendation of the Board of Directors and Reasons for Recommendation”
“Special Factors—Alternatives to the Merger”
“The Merger Agreement”
“Annex A: Merger Agreement”
“Annex C: ESL Letter Agreement”
“Annex D: Written Consent”
“Annex E: Liberty Consent”
“Annex F: Liberty Sale Letter Agreement”
| (e) | Agreements Involving the Subject Company’s Securities. Mr. Lampert entered into a letter agreement with Partners, dated as of June 2, 2010 (the “Lock-Up Agreement”), that restricts the purchases and sales by Mr. Lampert of certain securities of the Company. Pursuant to theLock-Up Agreement, Mr. Lampert generally is required to sell securities of the Company and purchase additional securities of the Company on a pro rata basis with the sales and purchases of securities of the Company made by Partners, and generally must make such sales and purchases on substantially the same terms and conditions as Partners (subject to certain legal, tax, accounting or regulatory considerations). Mr. Lampert is also restricted from certain sales of securities of the Company or purchases of additional securities of the Company except in accordance with the Lock-Up Agreement. The foregoing summary of theLock-Up Agreement does not purport to be complete and is qualified in its entirety by reference to theLock-Up Agreement, which is set forth as Exhibit (d)(5) hereto and is incorporated herein by reference. In addition, the information set forth under the following captions in the Information Statement is incorporated herein by reference: |
“Special Factors—Interests of Directors and Executive Officers in the Merger”
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“The Merger Agreement”
“Important Additional Information Regarding the Company—Security Ownership of Certain Beneficial Owners and Management”
“Annex A: Merger Agreement”
“Annex C: ESL Letter Agreement”
“Annex F: Liberty Sale Letter Agreement”
Item 6. Purpose of the Transaction and Plans or Proposals
RegulationM-A Item 1006
| (b) | Use of Securities Acquired. The information set forth under the following captions in the Information Statement is incorporated herein by reference: |
“Special Factors—Certain Effects of the Merger”
“The Merger Agreement—Merger Consideration”
“The Merger Agreement—Effect of the Merger on Company Common Stock”
“Annex A: Merger Agreement”
| (c)(1)-(8) Plans. | The information set forth under the following captions in the Information Statement is incorporated herein by reference: |
“Summary Term Sheet”
“Questions and Answers about the Merger and the Liberty Sale”
“Special Factors—Background of the Transaction”
“Special Factors—Recommendation of the Special Committee and Reasons for Recommendation”
“Special Factors—Recommendation of the Board of Directors and Reasons for Recommendation”
“Special Factors—Purposes and Reasons of the Company in Connection With the Merger”
“Special Factors—Purposes and Reasons of the ESL Filing Parties in Connection With the Merger”
“Special Factors—Plans for the Company in Connection With the Merger”
“Special Factors—Alternatives to the Merger”
“Special Factors—Certain Effects of the Merger”
“Special Factors—Source and Amount of Funds”
“Special Factors—Interests of Directors and Executive Officers in the Merger”
“SpecialFactors—De-listing andDe-registration of Company Common Stock”
“The Merger Agreement”
“Important Additional Information Regarding the Company—Market Prices and Dividend Data”
“Annex A: Merger Agreement”
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Item 7. Purposes, Alternatives, Reasons and Effects
RegulationM-A Item 1013
| (a) | Purposes. The information set forth under the following captions in the Information Statement is incorporated herein by reference: |
“Special Factors—Background of the Transaction”
“Special Factors—Purposes and Reasons of the Company in Connection With the Merger”
“Special Factors—Purposes and Reasons of the ESL Filing Parties in Connection With the Merger”
“Special Factors—Plans for the Company in Connection With the Merger”
“Special Factors—Certain Effects of the Merger”
| (b) | Alternatives. The information set forth under the following captions in the Information Statement is incorporated herein by reference: |
“Special Factors—Background of the Transaction”
“Special Factors—Recommendation of the Special Committee and Reasons for Recommendation”
“Special Factors—Recommendation of the Board of Directors and Reasons for Recommendation”
“Special Factors—Position of the Company on the Fairness of the Merger”
“Special Factors—Position of ESL on the Fairness of the Merger”
“Special Factors—Purposes and Reasons of the Company in Connection With the Merger”
“Special Factors—Purposes and Reasons of the ESL Filing Parties in Connection With the Merger”
“Special Factors—Alternatives to the Merger”
| (c) | Reasons. The information set forth under the following captions in the Information Statement is incorporated herein by reference: |
“Summary Term Sheet—The Merger”
“Summary Term Sheet—Recommendation of the Special Committee”
“Summary Term Sheet—Recommendation of the Board of Directors”
“Special Factors—Background of the Transaction”
“Special Factors—Recommendation of the Special Committee and Reasons for Recommendation”
“Special Factors—Recommendation of the Board of Directors and Reasons for Recommendation”
“Special Factors—Position of the Company on the Fairness of the Merger”
“Special Factors—Position of ESL on the Fairness of the Merger”
“Special Factors—Purposes and Reasons of the Company in Connection With the Merger”
“Special Factors—Purposes and Reasons of the ESL Filing Parties in Connection With the Merger”
“Special Factors—Alternatives to the Merger”
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| (d) | Effects. The information set forth under the following captions in the Information Statement is incorporated herein by reference: |
“Summary Term Sheet—The Merger”
“Summary Term Sheet—Merger Consideration”
“Summary Term Sheet—Interests of Directors and Executive Officers in the Merger”
“Summary Term Sheet—Treatment of the Company’s Equity Awards and Other Incentive Compensation”
“Summary Term Sheet—Material U.S. Federal Income Tax Consequences of the Merger”
“Summary TermSheet—De-listing andDe-registration of Company Common Stock”
“Questions and Answers about the Merger and the Liberty Sale”
“Special Factors—Background of the Transaction”
“Special Factors—Purposes and Reasons of the ESL Filing Parties in Connection With the Merger”
“Special Factors—Plans for the Company in Connection With the Merger”
“Special Factors—Certain Effects of the Merger”
“Special Factors—Interests of Directors and Executive Officers in the Merger”
“Special Factors—Material U.S. Federal Income Tax Consequences of the Merger”
“The Merger Agreement—The Merger”
“The Merger Agreement—Merger Consideration”
“The Merger Agreement—Certificate of Incorporation; Bylaws; Directors and Officers”
“The Merger Agreement—Effect of the Merger on Company Common Stock”
“The Merger Agreement—Payment Procedures”
“The Merger Agreement—Treatment of the Company’s Equity Awards and Other Incentive Compensation”
“The Merger Agreement—Conduct of Business Pending the Merger”
“The Merger Agreement—Other Covenants and Agreements”
“Annex A: Merger Agreement”
Item 8. Fairness of the Transaction
RegulationM-A Item 1014
| (a)-(b) | Fairness; Factors Considered in Determining Fairness. The information set forth under the following captions in the Information Statement is incorporated herein by reference: |
“Summary Term Sheet—Recommendation of the Special Committee”
“Summary Term Sheet—Recommendation of the Board of Directors”
“Summary Term Sheet—Opinion of PJ Solomon”
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“Special Factors—Background of the Transaction”
“Special Factors—Recommendation of the Special Committee and Reasons for Recommendation”
“Special Factors—Recommendation of the Board of Directors and Reasons for Recommendation”
“Special Factors—Opinion of PJ Solomon”
“Special Factors—Position of the Company on the Fairness of the Merger”
“Special Factors—Position of ESL on the Fairness of the Merger”
“Special Factors—Purposes and Reasons of the Company in Connection With the Merger”
“Special Factors—Purposes and Reasons of the ESL Filing Parties in Connection With the Merger”
“Special Factors—Interests of Directors and Executive Officers in the Merger”
“Annex G: PJ Solomon Opinion”
| (c) | Approval of Security Holders. The information set forth under the following captions in the Information Statement is incorporated herein by reference: |
“Summary Term Sheet—The Written Consents of Stockholders”
“Questions and Answers about the Merger and the Liberty Sale”
“Special Factors—Background of the Transaction”
“Special Factors—Position of the Company on the Fairness of the Merger”
| (d) | Unaffiliated Representative. The information set forth under the following captions in the Information Statement is incorporated herein by reference: |
“Summary Term Sheet—Recommendation of the Special Committee”
“Summary Term Sheet—Opinion of PJ Solomon”
“Special Factors—Background of the Transaction”
“Special Factors—Recommendation of the Special Committee and Reasons for Recommendation”
“Special Factors—Opinion of PJ Solomon”
“Special Factors—Position of the Company on the Fairness of the Merger”
“Annex G: PJ Solomon Opinion”
| (e) | Approval of Directors. The information set forth under the following captions in the Information Statement is incorporated herein by reference: |
“Summary Term Sheet—Recommendation of the Special Committee”
“Summary Term Sheet—Recommendation of the Board of Directors”
“Special Factors—Background of the Transaction”
“Special Factors—Recommendation of the Special Committee and Reasons for Recommendation”
“Special Factors—Recommendation of the Board of Directors and Reasons for Recommendation”
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| (f) | Other Offers. The information set forth under the following captions in the Information Statement is incorporated herein by reference: |
“Special Factors—Background of the Transaction”
“Special Factors—Recommendation of the Special Committee and Reasons for Recommendation”
“Special Factors—Recommendation of the Board of Directors and Reasons for Recommendation”
“Special Factors—Position of the Company on the Fairness of the Merger”
“Special Factors—Position of ESL on the Fairness of the Merger”
“Special Factors—Purposes and Reasons of the ESL Filing Parties in Connection With the Merger”
“Special Factors—Alternatives to the Merger”
Item 9. Reports, Opinions, Appraisals and Certain Negotiations
RegulationM-A Item 1015
| (a)-(b) | Report, Opinion or Appraisal; Preparer and Summary of the Report, Opinion or Appraisal. The opinion prepared by PJ Solomon and provided to the Special Committee and the Board of Directors, dated May 31, 2019, is attached as Annex G to the Information Statement and incorporated herein by reference. The discussion and/or presentation materials prepared by PJ Solomon and provided to the Special Committee and, in certain instances, the Board of Directors, dated February 5, 2019, April 6, 2019, April 8, 2019, April 23, 2019, April 24, 2019, May 1, 2019, May 2, 2019, May 9, 2019, May 10, 2019, May 26, 2019, May 27, 2019, May 31, 2019, May 31, 2019 and August 25, 2019 are set forth as Exhibits (c)(2) – (c)(15), respectively, hereto and are incorporated herein by reference. In addition, the information set forth under the following captions in the Information Statement is incorporated herein by reference: |
“Summary Term Sheet—Opinion of PJ Solomon”
“Special Factors—Background of the Transaction”
“Special Factors—Recommendation of the Special Committee and Reasons for Recommendation”
“Special Factors—Recommendation of the Board of Directors and Reasons for Recommendation”
“Special Factors—Unaudited Projected Financial Information of the Company”
“Special Factors—Opinion of PJ Solomon”
“Special Factors—Position of the Company on the Fairness of the Merger”
“Special Factors—Position of ESL on the Fairness of the Merger”
“Special Factors—Fees and Expenses”
“Annex G: PJ Solomon Opinion”
| (c) | Availability of Documents. The reports, opinions or appraisals referenced in this Item 9 are filed herewith or incorporated by reference herein and will be made available for inspection and copying at the principal executive offices of the Company during its regular business hours by any interested holder of Company Common Stock or representative who has been so designated in writing. |
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Item 10. Source and Amount of Funds or Other Consideration
RegulationM-A Item 1007
| (a)-(b) | Source of Funds; Conditions. Concurrently with the execution of the Merger Agreement, ESL Investments Inc. executed a commitment letter (the “Equity Commitment Letter”) with Transform pursuant to which it committed to contribute, or cause to be contributed, approximately $21,000,000 to Transform (subject to the terms and conditions set forth in the Equity Commitment Letter) to be used by Transform to pay the Merger Consideration. A copy of the Equity Commitment Letter is set forth as Exhibit (d)(2) hereto and is incorporated herein by reference. In addition, the information set forth under the following captions in the Information Statement is incorporated herein by reference: |
“Summary Term Sheet—Source and Amount of Funds”
“Special Factors—Background of the Transaction”
“Special Factors—Source and Amount of Funds”
| (c) | Expenses. The information set forth under the following captions in the Information Statement is incorporated herein by reference: |
“Summary Term Sheet—Expenses”
“Special Factors—Fees and Expenses”
“The Merger Agreement—Expenses”
| (d) | Borrowed Funds. The information set forth under the following captions in the Information Statement is incorporated herein by reference: |
“Special Factors—Source and Amount of Funds”
Item 11. Interest in Securities of the Subject Company
RegulationM-A Item 1008
| (a) | Securities Ownership. The information set forth under the following captions in the Information Statement is incorporated herein by reference: |
“Summary Term Sheet—Interests of Directors and Executive Officers in the Merger”
“Special Factors—Interests of Directors and Executive Officers in the Merger”
“Important Additional Information Regarding the Company—Security Ownership of Certain Beneficial Owners and Management”
(b) Securities Transactions. The information set forth under the following captions in the Information Statement is incorporated herein by reference:
“Important Additional Information Regarding the Company—Securities Transactions”
Item 12. The Solicitation or Recommendation
RegulationM-A Item 1012
| (d)-(e) | Intent to Tender or Vote in a Going-Private Transaction; Recommendations of Others. The information set forth under the following captions in the Information Statement is incorporated herein by reference: |
“Summary Term Sheet—The Written Consents of Stockholders”
“Special Factors—Background of the Transaction”
“Special Factors—Recommendation of the Special Committee and Reasons for Recommendation”
“Special Factors—Recommendation of the Board of Directors and Reasons for Recommendation”
“Special Factors—Interests of Directors and Executive Officers in the Merger”
“Annex D: Written Consent”
“Annex E: Liberty Consent”
Item 13. Financial Statements
RegulationM-A Item 1010
| (a) | Financial Information. The information set forth under the following captions in the Information Statement is incorporated herein by reference: |
“Special Factors—Unaudited Projected Financial Information of the Company”
“Important Additional Information Regarding the Company—Historical Consolidated Financial Information”
“Where You Can Find Additional Information”
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The Company’s audited consolidated financial statements for the fiscal years ended February 2, 2019 and February 3, 2018, and the notes thereto, contained in the Company’s Annual Report on Form10-K for the fiscal year ended February 2, 2019, and the Company’s unaudited financial statements for the three-month period ended May 4, 2019, and the notes thereto, contained in the Company’s Quarterly Report on Form10-Q for the three months ended May 4, 2019, are incorporated herein by reference.
| (b) | Pro Forma Information. Not applicable. |
Item 14. Persons/Assets, Retained, Employed, Compensated or Used
RegulationM-A Item 1009
| (a)-(b) | Solicitations or Recommendations; Employees and Corporate Assets. The information set forth under the following captions in the Information Statement is incorporated herein by reference: |
“Summary Term Sheet—Recommendation of the Special Committee”
“Summary Term Sheet—Recommendation of the Board of Directors”
“Questions and Answers about the Merger and the Liberty Sale”
“Special Factors—Background of the Transaction”
“Special Factors—Recommendation of the Special Committee and Reasons for Recommendation”
“Special Factors—Recommendation of the Board of Directors and Reasons for Recommendation”
“Special Factors—Position of the Company on the Fairness of the Merger”
“Special Factors—Interests of Directors and Executive Officers in the Merger”
“Special Factors—Fees and Expenses”
Item 15. Additional Information
RegulationM-A Item 1011
| (b) | Golden Parachute Compensation. The information set forth under the following caption in the Information Statement is incorporated herein by reference: |
“Special Factors—Interests of Directors and Executive Officers in the Merger”
| (c) | Other Material Information. The information set forth in the Information Statement, including all annexes thereto, is incorporated herein by reference. |
Item 16. Exhibits
RegulationM-A Item 1016
| Exhibit No. | Description | |
| (a)(1) | Definitive Information Statement on Schedule 14C filed by Sears Hometown and Outlet Stores, Inc. with the SEC on September 13, 2019 and incorporated herein by reference to such filing. | |
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| Exhibit No. | Description | |
| (a)(2) | Press release issued by Sears Hometown and Outlet Stores, Inc., dated June 3, 2019 (incorporated by reference to Exhibit 99.2 to the Current Report on Form8-K filed by Sears Hometown and Outlet Stores, Inc. on June 3, 2019). | |
| (b) | Not applicable. | |
| (c)(1) | Opinion of PJ Solomon to the Special Committee and the Board of Directors of Sears Hometown and Outlet Stores Inc., dated May 31, 2019 (included as Annex G to the Information Statement and incorporated by reference herein as Exhibit (c)(1)). | |
| (c)(2) | Valuation discussion materials prepared by PJ Solomon, dated February 5, 2019, for the Special Committee of Sears Hometown and Outlet Stores, Inc. | |
| (c)(3) | Discussion materials prepared by PJ Solomon, dated April 6, 2019, for the Special Committee of Sears Hometown and Outlet Stores, Inc. | |
| (c)(4) | Transaction analysis prepared by PJ Solomon, dated April 8, 2019, for the Special Committee of Sears Hometown and Outlet Stores, Inc. | |
| (c)(5) | Valuation summary prepared by PJ Solomon, dated April 23, 2019, for the Special Committee of Sears Hometown and Outlet Stores, Inc. | |
| (c)(6) | Share price analysis prepared by PJ Solomon, dated April 24, 2019, for the Special Committee of Sears Hometown and Outlet Stores, Inc. | |
| (c)(7) | Preliminary valuation materials prepared by PJ Solomon, dated May 1, 2019, for the Special Committee of Sears Hometown and Outlet Stores, Inc. | |
| (c)(8) | Discussion materials prepared by PJ Solomon, dated May 2, 2019, for the Special Committee of Sears Hometown and Outlet Stores, Inc. | |
| (c)(9) | Preliminary valuation materials prepared by PJ Solomon, dated May 9, 2019, for the Special Committee of Sears Hometown and Outlet Stores, Inc. | |
| (c)(10) | Preliminary valuation materials prepared by PJ Solomon, dated May 10, 2019, for the Special Committee of Sears Hometown and Outlet Stores, Inc. | |
| (c)(11) | Preliminary valuation materials prepared by PJ Solomon, dated May 26, 2019, for the Special Committee and the Board of Directors of Sears Hometown and Outlet Stores, Inc. | |
| (c)(12) | Discussion materials prepared by PJ Solomon, dated May 27, 2019, for the Special Committee and the Board of Directors of Sears Hometown and Outlet Stores, Inc. | |
| (c)(13) | Valuation materials prepared by PJ Solomon, dated May 31, 2019, for the Special Committee and the Board of Directors of Sears Hometown and Outlet Stores, Inc. | |
| (c)(14) | Discussion materials prepared by PJ Solomon, dated May 31, 2019, for the Special Committee and the Board of Directors of Sears Hometown and Outlet Stores, Inc. | |
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| Exhibit No. | Description | |
| (c)(15) | Discussion materials prepared by PJ Solomon, dated August 25, 2019, for the Special Committee and the Board of Directors of Sears Hometown and Outlet Stores, Inc. | |
| (d)(1) | Agreement and Plan of Merger, dated as of June 1, 2019, among Sears Hometown and Outlet Stores, Inc., Transform Holdco LLC and Transform Merger Corporation (included as Annex A to the Information Statement and incorporated by reference herein as Exhibit (d)(1)). | |
| (d)(2) | Equity Commitment Letter, dated as of June 1, 2019, entered into by ESL Investments, Inc. in favor of Transform Holdco LLC. | |
| (d)(3) | Letter Agreement, dated June 1, 2019, by and between Edward S. Lampert and Sears Hometown and Outlet Stores, Inc. (included as Annex C to the Information Statement and incorporated by reference herein as Exhibit (d)(3)). | |
| (d)(4) | Action by Written Consent of ESL Partners, L.P. and Edward S. Lampert, dated June 1, 2019 (included as Annex D to the Information Statement and incorporated by reference herein as Exhibit (d)(4)). | |
| (d)(5) | Lock-Up Agreement, dated June 2, 2010, by and between ESL Partners, L.P. and Edward S. Lampert (incorporated by reference to Exhibit 99.2 to the Statement on Schedule 13D with respect to the common stock of the Company filed by ESL Partners, L.P., ESL Investors, L.L.C., SPE I Partners, LP, SPE Master I, LP, RBS Partners, L.P., ESL Institutional Partners, L.P., RBS Investment Management, L.L.C., CRK Partners, L.L.C., ESL Investments, Inc. and Edward S. Lampert with the SEC on September 12, 2012). | |
| (d)(6) | Action by Written Consent of ESL Partners, L.P. and Edward S. Lampert, dated August 27, 2019 (included as Annex E to the Information Statement and incorporated by reference herein as Exhibit (d)(6)). | |
| (d)(7) | Letter Agreement, dated August 27, 2019, among Sears Hometown and Outlet Stores, Inc., Transform Holdco LLC and Transform Merger Corporation (included as Annex F to the Information Statement and incorporated by reference herein as Exhibit (d)(7)). | |
| (f)(1) | Rights of Appraisal, incorporated herein by reference to the section titled “Appraisal Rights” in the Information Statement. | |
| (f)(2) | Delaware Code Title 8 § 262 (included as Annex H to the Information Statement and incorporated by reference herein as Exhibit (f)(2)). | |
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SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
| Dated: September 13, 2019 | SEARS HOMETOWN AND OUTLET STORES, INC. | |||||
| By: | /s/ Charles J. Hansen | |||||
| Name: | Charles J. Hansen | |||||
| Title: | Vice President, General Counsel, and Secretary | |||||
| Dated: September 13, 2019 | TRANSFORM HOLDCO LLC | |||||
| By: | /s/ Edward S. Lampert | |||||
| Name: | Edward S. Lampert | |||||
| Title: | Chief Executive Officer | |||||
| Dated: September 13, 2019 | TRANSFORM MERGER CORPORATION | |||||
| By: | /s/ Kunal S. Kamlani | |||||
| Name: | Kunal S. Kamlani | |||||
| Title: | President | |||||
| Dated: September 13, 2019 | ESL PARTNERS, L.P. | |||||
| By: | RBS Partners, L.P., as its general partner | |||||
| By: | ESL Investments, Inc., as its general partner | |||||
| By: | /s/ Edward S. Lampert | |||||
| Name: | Edward S. Lampert | |||||
| Title: | Chief Executive Officer | |||||
| Dated: September 13, 2019 | RBS PARTNERS, L.P. | |||||
| By: | ESL Investments, Inc., as its general partner | |||||
| By: | /s/ Edward S. Lampert | |||||
| Name: | Edward S. Lampert | |||||
| Title: | Chief Executive Officer | |||||
| Dated: September 13, 2019 | ESL INVESTMENTS, INC. | |||||
| By: | /s/ Edward S. Lampert | |||||
| Name: | Edward S. Lampert | |||||
| Title: | Chief Executive Officer | |||||
| Dated: September 13, 2019 | EDWARD S. LAMPERT | |||||
/s/ Edward S. Lampert | ||||||
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