Liberty Tax has signed a definitive purchase agreement to purchase Sears Hometown’s Outlet business and Buddy’s Home Furnishings stores, together called Outlet Segment.
As part of the transaction, the company will offer around $132.9m, which will be financed through a mix of new debt, Liberty Tax’s balance sheet cash and an equity contribution from a Vintage Capital Management affiliate.
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According to the company, the divestment of Sears Outlet business is in compliance with the terms of the merger agreement between Sears Hometown and integrated retailer Transform Holdco.
Transform Holdco signed a deal this June to acquire the outstanding shares of Sears Hometown that are not owned by ESL Investments and its affiliates.
ESL Investments and its affiliates own approximately 55.2% of the outstanding shares of Sears Hometown.
Liberty Tax board of directors chairman Andrew Laurence 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.
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By GlobalData“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 recognise the strength in our future-facing franchise business model.”
Liberty Tax has signed a debt commitment letter with Guggenheim Credit Services and clients managed by Guggenheim Investments.
It has also signed an equity commitment letter with a Vintage affiliate. Both agreements are dependent on satisfaction of customary conditions.
The boards of directors and the special committee of Sears Hometown, along with Liberty Tax board of directors have approved the transaction.
Both the acquisition by Liberty Tax and the merger between Sears Hometown and Transform are expected to complete this October.
Liberty Tax’s wholly-owned subsidiary Buddy’s Newco has purchased 41 Buddy’s Home Furnishings stores from franchisee A-Team Leasing.
