True Value files for bankruptcy, will be sold
By: Eric Lagatta
USA today
..... Hardware wholesaler True Value has filed for Chapter 11 bankruptcy amid plans to sell its business to its home improvement rival
Do It Best.
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True Value, based in Chicago, said in a Monday [10/14/2024] news release that all of its 4,500 stores will remain open during the bankruptcy process because they are independently owned.
..... The 75-year-old company initiated the proceedings in order to enter into an agreement with Do It Best, which has offered to pay $153 million in cash to purchase the business, Reuters reported.
..... True Value, which sells a variety of home improvement goods such as tools, lumber and plumbing, said in bankruptcy court filings that it has succumbed to slumping sales that have affected other companies in the sector. The company has between $500 million and $1 billion in total liabilities, Reuters reported, citing its bankruptcy petition.
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"We determined that the sale of our business was the path forward to maximize value and best serve our retail partners and other stakeholders into the future," True Value CEO Christ Kempa said in a statement. "We believe that entering the process with an agreed offer from Do IT Best, who has a similar decades-long history in the home improvement space and also operates with a focus on supporting the members and helping them grow, is the most beneficial next step for true Value."
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Under the agreement with Do It Best, the home improvement rival will become a "stalking horse" bidder, according to True Value. That means that while the company, based in Fort Wayne, Indiana, is technically the lead bidder, True Value remains open to better offers.
..... In addition to agreeing to pay $153 million in cash, Do It Best would also take on about $45 million in contracts and other obligations and hire some True Value employees, Reuters reported.
..... Do It Best, a member-owned wholesaler of lumber and hardware products to independent stores, said in its own news release that the sale would cerate a worldwide network exceeding 8,000 stores in the U.S. and more than 50 countries around the world.
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The transaction with Do It Best is expectorated to close by the end of the year. [2024]
..... "We understand the unique challenges of the retail industry, and if we are successful in our bid for these assets we would be committed to driving True Value stores' growth alongside our valued Do It Best member-owners," Do IT Best President and CEO Dan Starr said in a statement. "This acquisition would represent not just the growth of Do It Best but a brighter future for the entire independent home improvement channel."
..... True Value, like many other retailers, has grappled with declining sales amid rising prices and a downturn in consumer spending.
..... It is now among a handful of prominent restaurant and retail chains that have filed for bankruptcy since the pandemic, including LL Flooring, Red Lobster, Rite Aid, Bed Bath & Beyond and Christmas Tree Shop. Among the latest to do so was discount retailer Big Lots, which has since shuttered hundreds of stores since it announce its bankruptcy proceedings in July. [2024]
..... Contributing: Mary Walrath-Holdridge, USA Today.