HOFFMAN ESTATES, Ill.,
March 17, 2020 /PRNewswire/
-- Transform Holdco (TFCO) announced today that
Costco (NASDAQ: COST) has acquired Innovel Solutions, its middle
mile and final mile delivery and installation business, for
$1 billion. Key components of
the agreement include a long-term commercial arrangement whereby
Costco provides TFCO warehousing, delivery and installation
services to Sears and Kmart members and Costco will retain over
1,500 Innovel employees on a go-forward basis. Additionally,
Costco will enter into a long-term commercial agreement whereby
Costco will leverage TFCO's Service Live platform to source
technicians for complex installations across the country.
This transaction will provide Innovel and its employees with the
resources to continue to build out a best in class logistics
platform and the proceeds from the sale will allow TFCO to repay
all of its non-real estate debt. It also positions TFCO to
pursue other transformative actions to fully leverage its core
assets and capabilities to realize maximum value for all
stakeholders.
Over the past year, during an extremely challenging retail
environment, TFCO's associates have worked tirelessly to
restore vendor relationships and to maintain financial support from
its lenders with a focus to return the company's retail
operations to profitability. Despite these efforts, the
support TFCO received fell well short of its needs. As a
result, the Sears and Kmart store formats have experienced
declining sales and continued losses, consistent with trends for
department store and other legacy retailers.
TFCO plans to further streamline retail operations over the next
several months and focus on those stores with a strong record of
success or meaningful real estate value. Although the Company will
reduce its store footprint, TFCO is committed to
fulfilling its obligations to all of its vendors.
TFCO currently owns or leases over 500
retail properties and supporting facilities. The
Company will focus its efforts on creating value from this
significant real estate portfolio and intends to continue to evolve
its small store format as a complement to the other core
businesses.
TFCO intends to put additional focus and emphasis on its Kenmore
and DieHard brands. In December 2019, TFCO sold the
DieHard brand to Advance Auto Parts. That agreement provided for
TFCO to retain DieHard branded non-automotive categories as a
royalty-free licensed business in
perpetuity. TFCO intends to build
these iconic brands globally, in partnership with
manufacturing leaders, distributors and retailers.
In addition, TFCO will continue to evolve its Shop Your Way
membership program and its associated Shop Your Way 5-3-2-1 credit
card to create value from the vast membership base and creative
marketing capabilities. TFCO will also continue to operate its Home
Services business and grow its Home Warranty, Protection
Agreement and Service Live businesses.
TFCO will continue to work with its financial and legal advisors
to adjust its capital structure and to pursue partnerships and
transactions with third parties to maximize the value of its
assets.
These transformative actions allow TFCO to focus on its core
assets and capabilities to deliver service excellence for its
members and customers. The company believes
this roadmap, which primarily focuses on its Real Estate,
Home Services, Brands and Shop Your Way membership program, gives
it the best chance to grow value and to maintain a meaningful
retail presence in the United
States to support the expansion of its core businesses.
Guggenheim Securities, LLC served as financial advisor and
Wachtell, Lipton, Rosen & Katz and DLA Piper served as legal
counsel to Transform Holdco in connection with this
transaction.
About Transformco
Transform Holdco, LLC is a leading integrated retailer focused
on seamlessly connecting the digital and physical shopping
experiences to serve its members – wherever, whenever and however
they want to shop. Transformco is home to Shop Your Way®, a social
shopping platform offering members rewards for shopping at Sears,
Kmart and other retail partners. Transformco operates through its
subsidiaries with full-line and specialty retail stores across
the United States.
About Costco
Costco currently operates 786 warehouses, including 547 in
the United States and Puerto Rico, 100 in Canada, 39 in Mexico, 29 in the United Kingdom, 26 in Japan, 16 in Korea, 13 in Taiwan, 11 in Australia, two in Spain, and one each in Iceland, France, and China. Costco also operates e-commerce sites
in the U.S., Canada, the
United Kingdom, Mexico, Korea, Taiwan, Japan, and Australia.
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SOURCE Transform Holdco, LLC