Hardware wholesaler True Value filed for Chapter 11 bankruptcy on October 14 as its sales have steadily gone downhill. The company seeks to sell itself to the hardware rival “Do its Best” for $153 million. True Value sells home improvement goods including hardware, tools, lumber, plumbing, and other heating appliances.
The company has stated that the retail stores are owned independently and will not be affected by the bankruptcy process. In total, the company has liabilities between $500 million and 1 billion as per their Chapter 11 bankruptcy filing.
True Value Files for Bankruptcy
On Monday, True Value stated in a press release that all the stores will remain open and will not be impacted by bankruptcy. The hardware company has initiated the proceeding to enter into an agreement with Do It Best, which has offered to pay $153 million.
Chris Kempa, CEO of True Value, stated, “We decided that selling our business was the best way to maximize value and support our retail partners and other stakeholders in the future.” He also said, “We believe that entering the process with an agreed offer from Do it Best, which 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.”
Do it Best Acquires True Value: A Strategic Move in the Hardware Market
Do it Best, an Indiana-based company, has agreed to become a “stalking horse” bidder for True Value’s assets, which means while True Value is proceeding to enter into an agreement with its rival, it also remains open to other higher bids. As per the agreement, Do it Best will pay $153 million in cash, take on about $45 million in contracts and obligations, and hire some employees from True Value.
Do it Best is a wholesale company that sells lumber and hardware products. The company has stated in a press release that the sale would increase the total count of its stores to 8,000 all over the world.
Bankruptcy: The New Pandemic for Retailers
Similar to True Value, many retailers are struggling with the decline in sales and high prices. Additionally, customers have become cost-conscious, decreasing the demand for products.
After the pandemic, several prominent restaurants and retail chains have filed for bankruptcy, including Red Lobster, Bed Bath and Beyond, Rite Aid, LL Flooring, and Christmas Tree Shop. Recently, discount retailer Big Lots has closed hundreds of stores after announcing bankruptcy proceedings. True Value is a surprising new addition to the list that has caught both customers and independent store owners off guard.
