True Value, the Chicago-based hardware wholesaler, has filed for Chapter 11 bankruptcy, a decision announced in a recent press release. Despite the financial restructuring, the company assures that all 4,500 of its independently owned stores will remain operational. This move comes after 75 years in business, with the intention of facilitating a sale to industry rival Do It Best.
True Value’s CEO, Chris Kempa, articulated the company’s approach, saying, “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.”
Acquisition by Do It Best
Do It Best has agreed to purchase True Value for $153 million in cash, acting as the “stalking horse” bidder. This term means they set the minimum bid for the company’s assets, which could potentially attract higher offers.
The Fort Wayne, Indiana-based Do It Best also plans to take on approximately $45 million in contracts and other obligations. Additionally, part of the agreement includes hiring some of True Value’s employees, which helps maintain some continuity amidst the changes.
The acquisition is not just about expansion but also integration, as Do It Best aims to strengthen its foothold by supporting and growing the True Value stores.
Dan Starr, President and CEO of Do It Best, noted the strategic importance of the acquisition, saying “We understand the unique challenges of the retail industry, and if we are successful in our bid for these assets we would be committed to driving True Value stores’ growth alongside our valued Do it Best member-owners.” The deal is expected to close by the end of this year.
This announcement arrives on the heels of Do It Best’s recent expansion efforts, which included a merger just over six months ago with United Hardware, a Midwest-based wholesale hardware distributor famed for its “Hardware Hank” brand.
According to an April press release, the merger allowed over 700 United Hardware locations to continue operating under their independent brand names, preserving their local identity while expanding Do It Best’s influence in the region
Broader Retail Challenges
True Value’s filing is part of a larger trend of financial distress within the retail sector. The company disclosed liabilities ranging from $500 million to $1 billion, mirroring difficulties faced across the industry.
Many businesses have struggled since the pandemic, with notable names like LL Flooring, Red Lobster, and Big Lots also entering bankruptcy. Recently, Big Lots announced its own proceedings, resulting in the closure of hundreds of stores.
The retail landscape has undergone significant changes, with numerous brands, including Hooters, Walgreens, and Disney Stores, shutting down underperforming locations. These closures are part of a broader strategy by businesses to adapt to a tough economic environment and evolving consumer preferences.
True Value’s sale to Do It Best represents a pivotal moment for the company, aiming to preserve its legacy and adapt to the new realities of the retail market.
