As the bidding for Sears Canada continues, ESL Partners and Fairholme Capital Management bow out of their joint negotiations to acquire the retailer.
The two companies, which had expressed interest in jointly pursuing a deal for the bankrupt retailer, have since announced they’re no longer planning to go that route—though both left the door open for potential future transactions related to the business, including independent bids.
ESL Partners and Fairholme Capital, which together own about two-thirds of the Canadian company’s shares, had retained joint legal representation in Canada after Sears Canada filed for bankruptcy in June.
Both companies said they were considering selling their shares, which would generate a tax loss for each business.
ESL Partners, which is fronted by Sears Holdings’ CEO Edward Lampert, holds more than a 45 percent stake in the retail chain, which it spun off in 2013. Sears Holdings retains roughly 12 percent of the Canadian business. Fairholme is in possession of about 20 percent of the company’s stock.
Bidding for Sears Canada ends on Aug. 31. According to reports, about 20 other companies are vying for the department store chain.
Sears Canada, which operates more than 200 locations, is working to restructure its business with the hope of emerging from creditor protection later this year. As a part of the restructuring, the company announced it would close several locations and cut almost 3,000 jobs.
Since the filing, Sears Canada has been the recipient of negative headlines related to the treatment of former employees and, more recently, about the bonuses paid out to company executives. While these employees have had to fight for pension and health benefits, executives will receive $7.6 billion in retention bonuses, which has resulted in legal action to try to block the payouts as well as a call to boycott the retailer.
Though Sears Canada has explained that the bonuses are common during a restructuring, former Sears Canada CEO Mark Cohen stands with the employees. “I would protect the employment of the folks working in stores. I don’t know that I would protect the employment of executives who, frankly, are in no small measure responsible for this problem,” Cohen told CTV News.
Sears Canada is currently holding liquidation sales in 54 locations.