True Value filed for bankruptcy on Oct. 14, indicating total liabilities between $500 million and $1 billion. The company said in court filings that it has succumbed to slumping sales that have affected other companies in the sector.
Founded in 1948, True Value sells a variety of home improvement goods like tools, lumber and plumbing. It operates as a member-owned wholesaler cooperative that sells its products mostly to hardware sellers, garden centers, industrial distributors and other merchants.
Despite the bankruptcy filing, the company said it will continue to supply products to its 4,500 locations. It added that its retail stores will remain open as they are independently owned and not part of the bankruptcy process.
The Chicago-based True Value found an unlikely savior in its rival hardware store Do It Best. The Fort Wayne, Indiana-based company agreed to pay $153 million in cash, take on about $45 million in contracts and other obligations, and hire some True Value employees by the end of the year.
Do It Best also agreed to serve as a "stalking horse" bidder for the Chicago-based hardware store's assets. This means that while Do It Best is technically the lead bidder, True Value remains open to better offers as per USA Today.
"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.
"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." (Related: BANKRUPTCY BOOM: U.S. saw 70 major bankruptcies in just 4 months, the third worst start of year since 2000.)
Commercial bankruptcies have risen 20% in 2024
Do It Best is a member-owned wholesaler of lumber and hardware products to independent store. In a separate press release, the company said the sale would create a worldwide network exceeding 8,000 stores in the U.S. and more than 50 countries around the world.
"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, president and CEO of Do It Best.
"Do It Best has a proven track record of driving profitability through the most efficient operations in the industry. This acquisition, if consummated, would provide True Value and independent hardware stores the strongest opportunities for growth for years to come."
True Value's bankruptcy filing and its subsequent purchase by Do It Best comes amid a surge in companies closing down for good. Commercial bankruptcies have risen 20 percent in 2024 compared with the same time period last year, with more than 22,500 businesses seeking protecting from creditors.
Even large corporations aren't spared, with 113 companies with more than $100 million in assets filing for either Chapter 7 or Chapter 11 bankruptcy. Among the factors cited by companies for going under are rising costs due to inflation and higher interest rates, together with a lingering impact from the pandemic.
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