Lowe's to buy Orchard California stores
A customer leaves Orchard Supply Hardware store in Mountain View, Calif. Lowe's says it plans to expand its California presence with an acquisition of Sears spinoff Orchard Supply Hardware Stores for about $205 million in cash. (Jan. 2, 2012) Credit: AP
Lowe's Cos., the second-largest U.S. home-improvement retailer, agreed to pay $205 million to add at least 60 Orchard Supply Hardware stores in California after Orchard filed for bankruptcy relief.
The acquisition will provide the retailer with a smaller store format and give it access to a new customer base in California, where it already operates 110 outlets, Lowe's said today in a statement. In addition to the cash purchase price, Lowe's will assume amounts owed to nearly all of Orchard's supplier partners.
Lowe's said it wants to increase its number of stores in California as housing recovers. The retailer operates half as many stores in California as Home Depot Inc., helping explain why its comparable-stores sales trailed its larger rival in the first quarter, Chief Executive Officer Robert Niblock said in an interview May 22.
Orchard, which has 91 hardware and garden stores, listed assets of $441 million and liabilities of $480.1 million in Chapter 11 papers filed in U.S. Bankruptcy Court in Delaware today. Lowe's said the offer will act as a "stalking horse bid" in an auction process, meaning it's an agreement between the two parties for Orchard Supply to try to attract further bids.
Lowe's will get a break-up fee of 3 percent of the purchase price if it fails to acquire Orchard's assets, according to the statement. An alternative bidder must outbid the retailer by at least $12 million.
The bankruptcy case is In re Orchard Supply Hardware Stores Corp., 13-11565, U.S. Bankruptcy Court, District of Delaware.
Out East: Mecox Bay Dairy, Kent Animal Shelter, Custer Institute & Observatory and local champagnes NewsdayTV's Doug Geed takes us "Out East," and shows us different spots you can visit this winter.
Out East: Mecox Bay Dairy, Kent Animal Shelter, Custer Institute & Observatory and local champagnes NewsdayTV's Doug Geed takes us "Out East," and shows us different spots you can visit this winter.
