(Corrects Dec. 2 story to change source to "ESL Investments, Inc" from "Sears Holdings Corp" in paragraph one and three)
(Reuters) - Sears Holdings Corp's <SHLD.O> Chief Executive Eddie Lampert proposed to buy a bigger stake in Sears Hometown and Outlet Stores Inc <SHOS.O>, if Sears Hometown entered into a partnership related to certain brands and its home services unit, ESL Investments Inc said.
Sears Holdings has been exploring alternatives — including partnerships for its Kenmore, Craftsman and Diehard brands, and its Sears Home Services unit since May — as it looks to reinvigorate its ailing business.
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In a filing with regulators, Lampert's privately-held hedge fund ESL Investments said Lampert met with representatives of Sears Hometown on Thursday to seek their participation in the process.
Once the biggest U.S. retailer, the company has struggled to compete against Amazon.com Inc <AMZN.O> as well as big brick-and-mortar chains such as Wal-Mart Stores Inc <WMT.N>, which offer much lower prices.
Sears Holdings has lost more than $8 billion over the last five years and posted a quarterly profit just once in the last four years.
As of Dec. 2 Lampert is the biggest shareholder with a 57.3 percent stake in Sears Hometown, which was spun off from Sears Holdings in 2012.
(Reporting by Jessica Kuruthukulangara in Bengaluru; Editing by Shounak Dasgupta)