Chicago — Hardware retailer True Value Co. LLC has initiated voluntary Chapter 11 bankruptcy proceedings in the U.S. Bankruptcy Court for the District of Delaware.
The Chicago-based retailer has also entered into an agreement to sell substantially all of its business operations to Do it Best Corp., another entity within the home improvement retail sector and former rival. According to Reuters, Do it Best will serve as the stalking horse bidder for True Value with an acquisition price set at $153 million in cash and the assumption of $45 million in contracts and other obligations.
“After a thorough evaluation of strategic alternatives, 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,” says Chris Kempa, CEO of True Value. “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 members and helping them grow, is the most beneficial next step.”
True Value stores — of which there are roughly 4,500 — are independently owned, aside from one company-owned store in Palantine, Ill. The company, which also operates 13 regional distribution centers, has said that it will continue its day-to-day operations serving franchisees.
True Value has taken steps throughout 2024 to better position the business, including modernizing legacy operations, driving greater efficiencies and investing in additional marketing campaigns, according to a press release issued by the company.
The bankruptcy filing was actuated in order to allow for the most efficient sale, with the companies targeting completion of the process by the end of this year. Throughout the sale, the company plans to use cash collateral to fund operations, with Do it Best pledging to provide incremental capital as needed.
The proposed acquisition with Indiana-based Do it Best would create a network of 8,000 home improvement retail locations across more than 50 countries.
Originally founded in 1948 as Cotter & Co., the retailer acquired the True Value trademark in 1963, with the acquisition of Hibbard, Spencer and Bartlett. According to the company website, True Value sales total roughly $10 billion annually. In 2018, private equity firm ACON Investments purchased a 70% stake in True Value, a deal that moved True Value’s business model away from a co-op structure.
— Hayden Spiess
SOURCE: www.REBusinessOnline.com