I mean, it been a few days since he bought some.
Sears (SHLD) Chairman Eddie Lampert bought another 44k shares of AutoZone (AZO) at between $103 and $104 a share. He now has 23.4m shares.
How long before AutoZone, Sears and AutoNation (AN) tie up? Lampert either own over 50% or is just about there in all three.
Disclosure (“none” means no position):Long SHLD, AN, none
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5 replies on “It’s Friday: Lampert Buys More AutoZone”
You keep mentioning this Todd, but to be honest I can’t see how Lampert can financially pull this off. SHLD doesn’t have the cash or the credit line to do this kind of transaction. He can’t take a loss on his positions at ESL or his investors would be pretty pissed…so he would need to buy both AN and AZO out for a premium, which makes it even more difficult. This whole Lampert SHLD experiment thing is interesting but honestly it looks like some of his hedge fund buddies are leaving him in a lurch. I appreciate your blog Todd. I think you provide some good commentary, but sometimes you really need to make a stronger arguement than you do. You claim that Eddie’s plan is to combine all three, but then offer no insight to how this could possibly be done from a financial standpoint. I think when you look at the numbers it becomes clear.
I am not claiming it is “his plan”. I am saying there are huge synergies.
could AZO use Sears auto locations? sure..is it a natural “merger” of the two? yes
could autonation use some of the real estate? sure
as far as premium, AN trades for $5 a share now and has a market cap of $780 million. about 1/2 of what sears had in the bank last Q.
azo has a market cap of $6billion.
I am not saying he buys both, I am saying there are pieces of each or whole that fit together very well.
Todd,
Just food for thought as far as AN…
Yes, AN currently trades at around $5. It has been killed as of late. Still, Lampert bought quite a lot of stock as high as 16-17 for ESL recently. Do you really think he would take a loss for ESL and somehow buy AN for a cheaper price now? This is why Lampert in my opinion is not yet on his way to WEB status. There is a huge conflict of interest between ESL and SHLD. He needs to decide which entity has his full attention. Eddie cannot possibly buy out AN with SHLD for under prices that he has paid for ESL on the open market…. and that is a big problem for SHLD shareholders. To me it seems as though Eddie is in some sort of weird transition stage here and the longer he keeps it up the longer he hurts everyone else involved, SHLD shareholders and his ESL partners. Who’s interest does he have at heart? If it’s SHLD than this is a fantastic opportunity and as fellow shareholder would love to pick up a cash cow like AN at these depressed levels. If it is ESL… well, then we are all in trouble. Any deal that is good for ESL in this enviornment is not good for SHLD (be it AN or AZO.)
Here is what their CFO answered on recent questions related to AutoNation
http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=AP&date=20081024&id=9264678
“Colin Langan – UBS: Okay, thank you for taking my question. Could you just comment on your liquidity situation? Are you concerned about any violating approaching some of your debt covenants? And would that impact maybe how you’d use cash going forward in terms of doing more share repurchases or making more acquisitions?”
“Mike Short: Colin, it is Mike Short. As I mentioned, we have quite a bit of liquidity notionally available under our revolver. When you consider our leverage ratio constraint, we have over $200 million in availability. In terms of how we manage relative to that ratio going forward, I think the business generates very significant cash flow and we have the ability to manage our liquidity situation within by how we deploy that cash flow.”
Todd, do you have something to add?
Disclosure: long an
ranni,
not really…i think the fears over AN are really just overblown..