True Value filed for Chapter 11 bankruptcy on Monday and is seeking to sell the 75-year-old business to a rival — the latest hardware company to succumb to a weak housing market, the company said.
The Chicago-based company said it would continue day-to-day operations at its 4,500 independently-owned retailers throughout the Chapter 11 process.
Hardware and lumber wholesaler Do it Best is the stalking horse bidder and has agreed to pay $153 million in cash for the sinking company, according to a court filing.
“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,” True Value CEO Chris Kempa said in a statement.
Like other hardware companies, True Value fell victim to a weak housing market, the company said in bankruptcy court filings.
As the housing market stalled because of high mortgage rates, there was less need for lumber and building materials.
Home Depot and Lowe’s have also struggled to bounce back from the consumer slowdown. Instead, discount retailers like Target and Walmart prevailed as cash-strapped customers searched for cheap deals.
Since new home owners typically buy fresh furniture — beds, couches, tables and chairs — homeware sales slumped, too.
Home furnishing retailers Big Lots and LL Flooring announced in September they had filed for bankruptcy as sales plummeted.
Do it Best is a member-owned hardware and lumber wholesaler that sells building materials to independent stores. The Fort Wayne, Ind.-based company raked in nearly $5 billion in sales last year, the company said.
“Do it Best has a proven track record of driving profitability through the most efficient operations in the industry,” Do it Best CEO Dan Starr said in a statement. “This acquisition, if consummated, would provide True Value and independent hardware stores the strongest opportunities for growth for years to come.”
The sale to Do it Best is expected to close by the end of the year if it remains the best offer on the table.