Fighting words from Ace and True Value
First came the blockbuster announcement from True Value concerning its plan to sell a controlling interest in the Chicago-based company. Then came the analysis on web bulletin boards and intranets.
And then the gloves came off.
One of the most recent shots fired in the co-op structure debate comes from Ace Hardware Executive VP and CFO William Guzik, who sought to point out some major differences between True Value’s recent deal with ACON Investments, and Ace’s 2007 plan to convert from a co-op to a c-corp. Guzik was responding to a post by True Value CEO John Hartmann, in which Hartmann said the current True Value’s plan and the old Ace plan are essentially the same.
Not true, Guzik wrote, in a letter to Ace members that was reposted on a popular industry bulletin board.
“Yes, Ace did consider a conversion from a co-op to a c-corp in 2007. And yes, it would have resulted in an elimination of patronage dividends in exchange for traditional corporate dividends and a floating stock price that would have resulted in retailers sharing in the growth of the company through increases in stock price. But Ace never considered a sale of the company and giving up control of your future to an outside group.”
Guzik called Hartmann’s note an attempt to confuse two issues: conversion from a co-op to a c-corp, and the sale of a company to outside investors.
“True Value is giving up control of the company to a private equity firm,” Guzik wrote. “We all know what private equity firms do.”
The post-announcement discussion of the True Value deal also raised the history of past accounting transgressions experienced by both co-ops – in terms that can be described as less than generous.
In his March 16 post defending the True Value-ACON Investments deal, Hartmann wrote that the Ace plan to convert “failed miserably because of a $150 million accounting error. We don’t have any accounting errors and this isn’t the merger from two decades ago either – we are returning money to our members, not destroying it.”
Guzik responded: “Hartmann’s reference to our accounting error is also a cheap shot. He fails to mention that True Value had its own $131 million accounting error a few years earlier. And how have each of us done since then? Since our accounting error, Ace has grown from a company with $3.9 billion in sales and $174 million in members’ equity, to over $5 billion in revenue and $550 million of members’ equity that consistently pays out over $150 million in annual patronage dividends.”
Guzik concluded his note: “Don’t let Hartmann’s distortion of the truth or HBSDealer’s headline this week that ‘In the True Value deal, echoes of a derailed Ace plan’ fool you.”
True Value has not immediately responded to a request for a comment on Guzik’s letter.
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What’s your take on the True Value-ACON Investments deal? Let us know at [email protected]. Or comment below.
And then the gloves came off.
One of the most recent shots fired in the co-op structure debate comes from Ace Hardware Executive VP and CFO William Guzik, who sought to point out some major differences between True Value’s recent deal with ACON Investments, and Ace’s 2007 plan to convert from a co-op to a c-corp. Guzik was responding to a post by True Value CEO John Hartmann, in which Hartmann said the current True Value’s plan and the old Ace plan are essentially the same.
Not true, Guzik wrote, in a letter to Ace members that was reposted on a popular industry bulletin board.
“Yes, Ace did consider a conversion from a co-op to a c-corp in 2007. And yes, it would have resulted in an elimination of patronage dividends in exchange for traditional corporate dividends and a floating stock price that would have resulted in retailers sharing in the growth of the company through increases in stock price. But Ace never considered a sale of the company and giving up control of your future to an outside group.”
Guzik called Hartmann’s note an attempt to confuse two issues: conversion from a co-op to a c-corp, and the sale of a company to outside investors.
“True Value is giving up control of the company to a private equity firm,” Guzik wrote. “We all know what private equity firms do.”
The post-announcement discussion of the True Value deal also raised the history of past accounting transgressions experienced by both co-ops – in terms that can be described as less than generous.
In his March 16 post defending the True Value-ACON Investments deal, Hartmann wrote that the Ace plan to convert “failed miserably because of a $150 million accounting error. We don’t have any accounting errors and this isn’t the merger from two decades ago either – we are returning money to our members, not destroying it.”
Guzik responded: “Hartmann’s reference to our accounting error is also a cheap shot. He fails to mention that True Value had its own $131 million accounting error a few years earlier. And how have each of us done since then? Since our accounting error, Ace has grown from a company with $3.9 billion in sales and $174 million in members’ equity, to over $5 billion in revenue and $550 million of members’ equity that consistently pays out over $150 million in annual patronage dividends.”
Guzik concluded his note: “Don’t let Hartmann’s distortion of the truth or HBSDealer’s headline this week that ‘In the True Value deal, echoes of a derailed Ace plan’ fool you.”
True Value has not immediately responded to a request for a comment on Guzik’s letter.
# # #
What’s your take on the True Value-ACON Investments deal? Let us know at [email protected]. Or comment below.