True Value, a well-known wholesaler of hardware and home improvement products, has filed for Chapter 11 bankruptcy as it seeks to sell its operations to rival Do It Best.
This decision, which aims to maximize value and ensure continued service for retail partners, was announced on Monday.
The iconic True Value brand has been serving customers for 75 years and operates independently owned retail stores, which will remain unaffected by the bankruptcy proceedings. The company emphasized that it will continue to supply products to its network of 4,500 stores during this transition.
True Value’s bankruptcy filing indicates that the company faces between $500 million and $1 billion in liabilities, primarily due to a significant cash crunch exacerbated by a sluggish housing market and changes in consumer spending habits.
“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,” CEO Chris Kempa stated.
Do It Best, based in Fort Wayne, Indiana, has stepped in as a “stalking horse” bidder for True Value’s assets, offering $153 million in cash along with assuming about $45 million in contracts and obligations. This strategic partnership positions Do It Best as a strong contender in the home improvement sector, potentially benefitting True Value’s independent retailers.
Dan Starr, CEO of Do It Best, expressed optimism regarding the acquisition, highlighting the company’s track record of driving profitability through efficient operations.
“A successful acquisition of True Value assets would represent a strategic milestone for Do It Best and home improvement retailers around the world,” Starr stated.
While True Value’s stores remain operational during the bankruptcy process, the company is open to higher bids before finalizing the sale. This transaction is expected to close by the end of the year, contingent upon the absence of more favorable offers.
With input from CNN and FOX Business.
