What happened

Shares of Sears Holding Corp (NASDAQOTH:SHLDQ) were gaining today after CEO Eddie Lampert called for a breakup of the company and offered to buy the Kenmore appliance brand. Investors had anticipated such a split as a possibility for extracting value from company, and the news sent shares up 5.5% as of 2:56 p.m. EDT Monday.

The exterior of a Sears department store

Image source: Sears.

So what 

Lampert, whose hedge fund ESL Investments is a majority shareholder in Sears, said in a letter to the board that he was willing to make an offer to take over Kenmore, as well as the Sears Home Improvement and PartsDirect businesses of the Sears Home Services division. Lampert believes that all three parts of the business have substantial value and that divesting them would help the company improve its debt and liquidity profile.   

ESL proposed to acquire the parts of Sears Home Services for $500 million, and also said it would make an offer for Kenmore and certain parts of Sears' real estate. The letter also made clear that ESL's main goal is seeing that such assets are funded in order to unlock capital for Sears Holdings.

Now what 

Such divestitures have become common for Sears, as in the past the company spun off or sold businesses like Lands End, Craftsman tools, and 235 stores to Seritage Growth Properties. Selling off such assets is likely the best way to stave of bankruptcy. However, even if Sears is able to get the cash infusion that would come from a sale, the underlying business is so broken that it's hard to see the company mounting a comeback. Comparable sales are falling by double digits, and Sears continues to report wide losses. Selling Kenmore isn't going to change that.