Iconic hardware wholesaler seeks buyer protection through bankruptcy amid plans to hand over business operations to rival.

CHICAGO, Oct. 14, 2024 – True Value Company, a legacy name in the hardware and home improvement sector, announced it has entered a definitive agreement to sell nearly all of its business operations to industry peer Do it Best Corp. The deal is part of a strategy to maximize value for stakeholders, with the company initiating Chapter 11 bankruptcy proceedings to ensure a smooth transition. True Value’s independently owned retail stores will not be affected by the restructuring, continuing operations as usual under their existing model.

A Strategic Exit Amid Market Challenges

The decision to file for Chapter 11 bankruptcy in the U.S. District of Delaware aims to facilitate the sale through an orderly process, with Do it Best serving as the stalking horse bidder—a key designation that ensures the bid will set the floor price during a competitive auction under Section 363 of the Bankruptcy Code.

True Value’s Chief Executive Officer Chris Kempa emphasized that the sale to Do it Best aligns with both companies’ long-standing commitment to supporting independent hardware retailers. “This transaction was carefully considered as part of our strategic alternatives. Partnering with a like-minded industry leader ensures a stable and prosperous future for our retail partners, employees, and customers,” said Kempa.

The sale follows a challenging year for True Value, which has undergone multiple transformations to modernize its operations, streamline costs, and increase marketing efforts in an evolving home improvement sector.

Do it Best: Strengthening Its Competitive Position

For Do it Best Corp., the deal marks a pivotal opportunity to solidify its foothold within the $500 billion U.S. hardware and home improvement market. Dan Starr, President and CEO of Do it Best, highlighted the strategic significance of the acquisition: “This acquisition represents an exciting milestone for us and reflects our commitment to providing independent retailers with the tools to grow profitably.”

If completed, the merger would add True Value’s robust supply chain network to Do it Best’s already efficient operations, potentially positioning the combined entity as a more formidable competitor against retail giants like The Home Depot and Lowe’s.

What Chapter 11 Means for True Value’s Retailers and Vendors

While True Value’s independently owned stores are not included in the Chapter 11 proceedings, the company noted that its one company-owned location in Palatine, Illinois will be involved. The bankruptcy filing will allow True Value to continue day-to-day operations without disruption while seeking the best possible outcome through the auction process.

True Value also reassured its vendors, employees, and partners by filing several “first-day motions”—court requests aimed at ensuring payroll, employee benefits, and essential customer programs continue without interruption. Vendors can expect to receive payment for goods and services rendered after the filing, maintaining a degree of business continuity.

To maintain liquidity throughout the sale process, True Value will use its existing cash collateral and, if needed, can access additional capital from Do it Best, which has committed to providing financial support during the proceedings.

An Uncertain Future but Hope for Stability

The Chapter 11 filing underscores the pressure on legacy wholesale operations to adapt in a market increasingly dominated by online sales and big-box retailers. For years, True Value operated under a cooperative model, helping independent retailers thrive by offering flexible product inventories and operational autonomy. However, industry insiders suggest that tight margins and changing consumer habits have made it difficult for traditional wholesalers to remain profitable.

The company aims to finalize the sale by the end of 2024, with court approval serving as the final step in transferring operations to Do it Best. True Value hopes this transaction will safeguard its brand legacy while opening new avenues for growth under the leadership of its soon-to-be owners.

Legal and Financial Advisors Guide the Sale

True Value has engaged top-tier advisors to oversee the sale and bankruptcy process. Law firms Skadden, Arps, Slate, Meagher & Flom LLP, Glenn Agre Bergman & Fuentes LLP, and Young Conaway Stargatt & Taylor, LLP are managing the legal aspects, while M3 Partners, LP and Houlihan Lokey are serving as financial advisors and investment bankers, respectively.

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