Do it Best intends to acquire True Value
True Value Company said it entered an agreement to sell substantially all of the company's business operations to Fort Wayne, Indiana-based Do it Best Corp.
The move involves filing for Chapter 11 bankruptcy protection through the U.S. Bankruptcy Court for the District of Delaware. True Value will continue its day-to-day operations serving 4,500 retailers retailers. True Value stores are independently owned and are not a part of the Chapter 11 proceedings —with the exception of one company-owned store in Palatine, Illinois.
"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," said Chris Kempa, True Value's CEO. "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 for True Value and our associates, customers, and vendor partners. We thank these valued stakeholders for their continued loyalty as we work to secure a stronger future for True Value.”
Chicago-based True Value and Do it Best say they are targeting completion of the sale process by year end.
[Read the press release: Do it Best Makes Bid to Acquire True Value Assets here.]
At Do it Best, which recently merged with United Hardware and its Hardware Hank brand, the True Value deal—if consummated— is described as potentially historic. It would create a worldwide store network exceeding 8,000 locations in the U.S. and more than 50 countries around the globe, the co-op said.
“A successful acquisition of True Value assets would represent a strategic milestone for Do it Best and home improvement retailers around the world,” said Do it Best CEO Dan Starr. “Do it Best has a proven track record of driving profitability through the most efficient operations in the industry. This acquisition, if consummated, would provide True Value and independent hardware stores the strongest opportunities for growth for years to come.”
True Value is requesting designation of Do it Best as the "stalking horse," or lead bidder and to initiate a competitive bidding process under Section 363 of the Bankruptcy Code designed to achieve the highest or otherwise best value for the company. According to court papers, the stalking horse agreement includes a cash payment of $153 million.
"The Debtors believe that the proposed transaction will maximize value for their stakeholders, preserving many jobs and a nearly century-old national brand," reads the court filing.
Kempa forecast a smooth transition. “Importantly, while this process moves forward, it is business as usual,” he wrote in an Oct. 14 note to True Value retailers. “We expect to get immediate access to liquidity approved by the court which will support our day-to-day operations.”
To support the day-to-day business through the sale, True Value is seeking to use its cash collateral to fund operations. To the extent True Value requires additional financing during the process, the company has received a commitment from Do it Best to provide incremental capital.
True Value is also filing with the court a series of customary motions seeking to uphold its commitments to its stakeholders during the process. These "first day" motions include requests to continue to pay wages and provide benefits to associates in the ordinary course and offer essential customer programs.
The company anticipates paying vendors in the ordinary course for authorized goods received and services rendered after the filing.
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