True Value Files for Bankruptcy, Agrees to Sale

The 75-year-old hardware wholesaler True Value Company voluntarily initiated Chapter 11 proceedings on Oct. 14 and announced it would sell its business operations to Do it Best Corp. for $153 million. Do it Best is a member-owned wholesaler based in Fort Wayne, Ind., that sells hardware, lumber, and other home goods to independent stores.

The Chicago-based True Value said it will continue its day-to-day operations serving its 4,500 independently owned retailers, which are not a part of the bankruptcy proceedings. The company said it will use its cash collateral to fund operations; however, Do it Best has committed to providing incremental capital if needed.

"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," True Value CEO Chris Kempa said in a news release. 

True Value’s bankruptcy court filings revealed that the company is facing a significant cash crunch due in part to a slowing housing market and consumers pulling back on discretionary purchases, according to a CNN report. 

"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 and CEO. "This acquisition … would provide True Value and independent hardware stores the strongest opportunities for growth for years to come."

True Value is requesting designation of Do It Best as the "stalking horse," or lead, bidder 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.

The transaction is expected to close by the end of the year, unless True Value receives a better offer.