Sears plans to open three new Home & Life stores in May.

Sears and Sears Hometown & Outlet Stores might be getting back together.

Transform Holdco, the company owned by former Sears chairman Edward S. Lampert and his hedge fund ESL Investment, the same company that bought Sears out of bankruptcy in February, has entered into a deal to acquire the remaining shares of Sears Hometown for a price of $2.25 a share.

“We are excited to bring Sears Hometown, its associates and network of independent dealers and franchisees back into the Sears and Kmart family,” Lampert said in a statement. “Our investment demonstrates our commitment to growing Transform for the benefit of our members and customers, associates, vendors and communities across the country. While, initially, the companies will operate independently, we see many opportunities where we can partner to serve our customers better and enjoy efficiencies of scale once these businesses are under one roof.”

While Lampert and ESL own the new Sears, Sears Hometown & Outlet Stores are not part of the iconic retailer. In fact, Sears Hometown & Outlet Stores spun-off of Sears in 2012 as a way to increase revenues for the roughly 1,100 Sears Hometown stores nationwide that sold hardware and appliances, and 122 Outlet stores that sold Sears merchandise, including apparel, appliances, gardening equipment, sporting goods and electronics, at discounted prices.

Transform owns 58 percent of the outstanding shares of Sears Hometown. Lampert first placed a bid for the remaining shares of Sears Hometown back in April. The same month it was revealed that Sears Hometown was facing liquidation. Shares of Sears Hometown & Outlet stores are down nearly 90 percent since May 2014. ESL called the April proposal a “considerable premium to the market price.”

Even so, Sears Hometown rejected Transform’s bid at the time.

“Representatives of [Sears Hometown and Outlet Stores] communicated to representatives of Transform Holdco and the reporting persons that the special committee of the board formed to evaluate the offer was unable to conclude that a transaction on the terms proposed in the offer letter would be in the best interest of [Sears Hometown and Outlet Stores’] stockholders unaffiliated with the reporting persons,” according to an April regulatory document.

But Will Powell, chief executive officer and president of Sears Hometown and Outlet Stores, now said merging the two companies is the “best path forward.”  

“We believe that reuniting our Sears Hometown segment stores with Transform’s Sears full-line stores will result in a more consistent customer experience across Sears branded storefronts, generate higher total revenues and leverage efficiencies of scale to improve costs and margins, all of which could lead to improved profitability for Sears Hometown’s dealers and franchisees,” Powell said in a statement.

Under the terms of the deal, Sears Hometown, which now has 491 Hometown stores and 126 Outlet stores located in 49 states, Puerto Rico and Bermuda and sold $1.4 billion worth of goods last year, has a specified period in which it can market and sell its Sears Outlet and Buddy’s Home Furnishing Stores businesses to a third party for a minimum price of $97.5 million. If in fact the Sears Hometown & Outlet Stores and Buddy’s Home Furnishing Stores, referred to collectively as “the outlet segment,” are sold, then the deal with Transform to purchase the Outlet Stores will become void. If Sears Hometown does proceed with the Transform deal, it must also enter into the agreement no later than Aug. 24 and the sale must be completed by Oct. 23.

The transaction is expected to close in Sears Hometown’s third quarter of 2019, at which time Sears Hometown will cease to be a publicly held corporation.

“We will work with Transform over the coming months to ensure that our dealer network is in a position to leverage the best of Transform’s unique brands, services and online capabilities to bring additional value to their customers,” Powell said.