Lowe’s To Acquire Some Orchard Supply Hardware Stores
Jun 17, 2013
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Home improvement retailer Lowe's Companies entered into an asset purchase agreement with Orchard Supply Hardware to acquire most Orchard assets. Lowe's will pay about $205 million in cash and assume payables owed to nearly all Orchard suppliers.
Orchard sells hardware and home improvement products including outdoor power equipment and outdoor grills. It does not sell home appliances. Orchard's smaller-format metro store locations will give Lowe's a new store format and a new customer base in California.
Lowe's intends to have Orchard operate as a separate, standalone business, retaining its brand under the leadership of Orchard's current management team.
Orchard is based in San Jose, CA and had fiscal 2012 revenue of $657 million. It operates 91 neighborhood hardware and garden stores. primarily in densely populated markets in California.
The transaction calls for Lowe's to acquire at least 60 of the stores, based on further due diligence on the locations. The Orchard stores have an average of about 36,000 square feet of selling space, compared to 113,000 square feet for an average Lowe's home improvement store. Lowe's currently operates 110 stores in California.
The transaction will happen through a court-supervised process under Section 363 of the U.S. Bankruptcy Code and is subject to an auction and Bankruptcy Court approval. The agreement with Lowe's will serve as the "stalking-horse bid" in the auction process. Orchard has filed a petition for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware.
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