Liberty Tax Buys Sears Hometown: Why Is The Tax Preparer Buying Retailers?

A man dressed as the statue of Liberty at a tax assistance business in northern Virginia — Bogi Johannes, who is dressed as the Statue of Liberty, tries to attract business for Liberty Tax preparers in Falls Church, Virginia April 8, 2010. The deadline for Americans to file their 2009 income tax returns in April 15th. Reuters

Liberty Tax Service’s parent company Liberty Tax Inc. (TAXA) has acquired Sears Hometown’s Outlet (SHOS) business in an all-cash deal worth $132.9 million. Liberty Tax said it will finance the purchase through a combination of new debt, cash, and an equity contribution from Vintage Capital Management, LLC.

Liberty Tax said that through the transaction, it will offer “high quality home goods to consumers across the nation.” It also said it will operate a combination of company-owned stores and franchisee-operated stores.

“We are excited about the acquisition of Sears Outlet and its unique model that offers its customers in-store and online access to outlet-value products across a broad assortment of merchandise categories, while serving as a valuable supply chain partner for its vendors,” Andrew Laurence, chairman of Liberty Tax’s board of directors, said.

“This is a continuation of Liberty Tax’s strategy of identifying and acquiring franchised or franchisable businesses while also building scale at attractive acquisition valuations. It’s an exciting time for Liberty Tax and its shareholders as we begin to recognize the strength in our future-facing franchise business model,” he added.

Through the acquisition, Liberty Tax also picks up 38 Buddy’s Home Furnishing stores, a rent-to-own retailer, which Liberty purchased as many as 300 stores from earlier in the year as part of a move it said was designed to transform its business with complementary products.

Liberty Tax has been scooping up retailers, buying The Vitamin Shoppe in early August for $208 million. Its Sears Hometown purchase interrupts the purchase by Transform Holdco, the company that purchased Sears and Kmart, as under the agreement the retailer could accept higher purchase offers.

Sears Hometown has struggled as of late, seeing its sales fall nearly 24 percent in Q1 and reporting a net loss of $7.8 million.

Shares of Liberty Tax were up 0.17 percent as of 12:15 a.m. ET on Wednesday while shares of Sears Hometown were down 1.17 percent at the same time.