Since an October 2012 initial public offering at around $31 a share, Sears Hometown and Outlet Stores Inc. (NASDAQ: SHOS) has lost about 94% of its value and closed at $1.90 on Friday. Shares got a boost of around 10% Monday morning following the announcement that an entity associated with Eddie Lampert, the company’s largest shareholder, has offered to buy the shares he doesn’t already own for $2.25 a share. RBS Partners, also an ESL Investments company, owns just over 46% of Sears Hometown’s outstanding stock.

The offer was made Friday evening by Transform Holdco, an affiliate of Lampert’s hedge fund, ESL Investments, and was considered over the weekend by a special committee of three board members who had the “exclusive authority” to decide whether to engage in further discussions with Transform Holdco or to reject the proposal.

According to Monday’s announcement, Transform Holdco would only proceed with the proposal if the special committee recommended it and the full board approved it. Here’s what the Sears Hometown announcement had to say:

Following the review of the Proposal by the special committee and its advisors, the special committee concluded that a transaction on the terms contemplated by the Proposal would not be in the best interests of the Company’s unaffiliated stockholders and communicated that conclusion to representatives of Transform.  The parties are continuing discussions regarding potential transactions between the parties.

Transform Holdco’s offer represented a premium of about 18.4% to Friday’s closing price and a 43% premium to the stock’s 52-week low of $1.57 posted in late December. The entity was formed in January to purchase what was then left of the assets of Sears Holding.

Sears Hometown and Outlet Stores sell appliances, yard care products and other hardware. Sears announced last week that it planned to open three small format stores next month that would feature appliances and other products for the home. The company plans to call them Home & Life stores.

Sears Hometown and Outlet Stores and its independent dealers and franchisees operate 677 stores across 49 states. Converting those to Home & Life stores is likely what Lampert and ESL have in mind. That plus getting rid of whatever leases and properties Sears Holdings has left that are larger than 10,000 to 15,000 square feet, the size the company has said it plans for its new, smaller stores. At the end of 2018, Sears Hometown and Outlet stores claimed 900 locations.

The Hometown and Outlet stores have also run into problems with independent dealers and franchisees. Former Sears Canada CEO Mark Cohen, who now directs a retail studies program at Columbia Business School, told Forbes last August that Hometown and Outlet had been “cutting their commissions for years and requiring them to hold an increasing number of sales at prices too low for dealers to make money.” Why would a company that wants to make money for itself and its dealers and franchisees behave like that? The answer to that is left as an exercise for the reader.

Here’s a hint: Even if Transform Holdco and Lampert have to double their offer for the Hometown and Outlet shares, there are still 677 stores left to pillage at a discount of 85% to the IPO price.

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