It was just a matter of time before the mystery surrounding money manager Edward Lampert’s true interests in Sears, Roebuck & Co. and Kmart Holding Corp. was revealed.
Lampert, chairman, chief executive officer and founder of the $9 billion, Greenwich, Conn.-based hedge fund ESL Investments Inc., has at times been called the next Warren Buffett. Lampert, the former chairman of Kmart, now becomes chairman of the newly formed Sears Holdings.
For nearly two years, it had been speculated by many in the retail industry that Lampert, 42, was up to something with ESL’s growing stake in Kmart Holdings, which eventually swelled to over 50 percent, as well as its roughly 15 percent stake in Sears.
Lampert is credited with helping bail Kmart Holdings out of bankruptcy in May 2003. The renewed discount retailer eventually became profitable in the fourth quarter of fiscal 2003, even as same-store sales have remained in negative territory.
ESL also holds stakes in retailers such as AutoZone Inc., AutoNation Inc. and telecom company MCI. Lampert generally searches for undervalued companies but his firm’s other clients reportedly range from media mogul David Geffen to Michael Dell, the founder of Dell Inc.
Lampert has an interesting recent past as well. He was kidnapped in January 2003 and held at gunpoint at a Days Inn Motel in Hamden, Conn., by four men. The men tried to extort money from Lampert and ESL Investments, according to the District of Connecticut’s U.S. Attorney’s Office, but Lampert was released after a couple of days by promising to leave about $40,000 in cash for the abductors several days later in a trash can in a Wendy’s restaurant in Greenwich.
With the help of the Federal Bureau of Investigation, all of men involved in Lampert’s kidnapping were eventually found and pleaded guilty to charges of kidnapping and robbery with a firearm.
Prior to founding ESL in 1988, Lampert worked for investment bank Goldman, Sachs & Co., and he holds a bachelor’s degree from Yale University.
Suggesting his motives for this latest deal, Lampert, who will also be part of a 10-member board of directors at Sears Holdings, said in a statement that “the merger will enable us to manage the businesses of Sears and Kmart to produce higher return than either company could achieve on its own.”