True Value declares Chapter 11, will sell itself to Do it Best
True Value Company has filed for Chapter 11 bankruptcy protection with plans to sell itself to a rival.
The 75-year-old hardware wholesaler has entered into an agreement to sell substantially all of its business operations to competitor Do it Best Corp. True Value , which was purchased by a private equity fund in 2018, is targeting completion of the sale process by year-end.
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. True Value said it will continue its day-to-day operations serving 4,500 independently-owned retailers.
"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 True Value CEO Chris Kempa. "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."
Financial details
The agreement with Do it Best provides True Value with cash consideration and assumption of liabilities related to the ongoing business. 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.
True Value is seeking to use its cash collateral to fund operations and has received a commitment from Do it Best to provide incremental capital. The company is also filing a series of customary "first day" motions including requests to continue to pay wages and provide benefits to associates and offer essential customer programs.
True Value says it anticipates paying vendors in the ordinary course for authorized goods received and services rendered after the filing. The retailer’s stores are independently owned and are not a part of the Chapter 11 proceedings, with the exception of one Company-owned store in Palatine, Ill.
"A successful acquisition of True Value assets would represent a strategic milestone for Do it Best and home improvement retailers around the world," said Dan Starr, Do it Best president & CEO. "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."
Skadden, Arps, Slate, Meagher & Flom LLP, Glenn Agre Bergman & Fuentes LLP, and Young Conaway Stargatt & Taylor, LLP are serving as legal counsel, M3 Partners, LP is serving as financial advisor, and Houlihan Lokey is serving as investment banker to the company.
True Value Company is headquartered in Chicago. Do it Best Corp. is headquartered in Fort Wayne, Ind.
