Sears' Lampert Finds a New Foe

In his bid for Restoration Hardware (RSTO), Ed Lampert is butting heads with yet another investment maven.

He acquired Sears Roebuck just weeks after Steve Roth's real estate investment trust, Vornado Realty (VNO), disclosed a 4.3% stake in the retailer in 2004. Later, he clashed with Bill Ackman of Pershing Square Capital in his bid to acquire Sears Canada in its entirety.

Now Lampert, the hedge fund superstar who is also chairman of Sears Holdings (SHLD), is in a battle with Catterton Partners, a consumer-focused private-equity firm based in his own stomping grounds -- Greenwich, Conn.

They're fighting over Restoration Hardware, a beat-up, high-end home furnishings retailer that has put itself up for sale in the midst of a massive downturn in the U.S. housing market that is weighing on home goods retailers from Lowe's (LOW) to Target (TGT).

Catterton has the inside track over Lampert, having teamed up with Restoration Chairman and CEO Gary Friedman -- a merchandising genius credited with building Williams-Sonoma (WSM) into an arbiter of good taste. Together, they've signed a deal to pay $6.70 a share, or about $267 million, for Restoration Hardware, with plans to take it private and revamp its crippled supply chain, which is a drag on the retailer's financials despite its quality brand.

That deal, however, allows Restoration to entertain competing proposals from third parties through Dec. 13. Now, Lampert is signaling that his retail empire is willing to beat Catterton's per-share offer by a nickel, or maybe more, if Restoration's board will forge a confidentiality agreement and allow his team to perform due diligence.