MOORESVILLE, N.C. — Lowe’s Companies, Inc. (NYSE: LOW), the world’s second largest home improvement retailer, today announced that its acquisition of the majority of assets of Orchard Supply Hardware has been approved by the U.S. Bankruptcy Court for the District of Delaware. Under the terms of the transaction, Lowe’s will acquire 72 Orchard stores for approximately $205 million in cash, plus the assumption of payables owed to nearly all of Orchard’s supplier partners. Lowe’s expects to close the transaction by the end of August.
Once completed, the acquisition will enable Lowe’s to expand its presence and reach a new customer base in California, where Lowe’s is currently underpenetrated, positioning the Company to more fully participate in California’s economic recovery.
Lowe’s said Orchard will operate as a separate, standalone business, retaining its brand and its San Jose headquarters.
Lowe’s also announced that upon closing, Richard D. Maltsbarger, Lowe’s executive who led the team to acquire Orchard, will become President of Orchard. Orchard’s current President and CEO Mark Baker has informed Lowe’s of his decision to accept a position as President and CEO of the Aircraft Owners and Pilots Association following the closing. Maltsbarger will work closely with Orchard’s strong and seasoned team of executives led by Steven L. Mahurin, chief retail officer, and Chris D. Newman, chief financial officer and head of development. Upon closing, Mahurin will be responsible for Orchard’s merchandising, marketing and store operations, and Newman will have responsibility for finance, information technology and ecommerce, supply chain and loss prevention. Maltsbarger will continue to report to Lowe’s Chairman, President and CEO, Robert A. Niblock.
“We are confident that Orchard’s talented management team, led by Richard Maltsbarger, will continue to execute their successful repositioning strategy and deliver long-term profitable growth,” said Niblock. “We look forward to completing the transaction and welcoming Orchard to the Lowe’s family of businesses.”
Located in high-density, prime locations that are difficult for larger format retailers to enter, Orchard’s smaller-format “neighborhood” stores are a natural complement to Lowe’s strengths in big-box retail. Orchard’s hardware and backyard stores offer a product selection focused on paint, repair and backyard categories in approximately 36,000 square feet of selling space, compared to 113,000 square feet of selling space for an average Lowe’s home improvement store. Lowe’s currently operates 110 stores in California.
As announced on June 17, 2013, Lowe’s entered into a purchase agreement with Orchard that served as the “stalking-horse bid” in a Bankruptcy Court-supervised auction under Section 363 of the U.S. Bankruptcy Code. No other bids were received by the Court mandated deadline of August 9, 2013. Orchard initiated Chapter 11 proceedings on June 17, 2013 in the U.S. Bankruptcy Court for the District of Delaware. Based in San Jose, California, Orchard reported annual revenue of $657 million for fiscal 2012.
Goldman Sachs is acting as financial advisor to Lowe’s, while Hunton & Williams LLP is acting as legal advisor.
With fiscal year 2012 sales of $50.5 billion, Lowe’s Companies, Inc. is a FORTUNE® 100 company that serves approximately 15 million customers a week at more than 1,750 home improvement stores in the United States, Canada and Mexico. Founded in 1946 and based in Mooresville, N.C., Lowe’s is the second-largest home improvement retailer in the world. For more information, visit Lowes.com.
Source: Lowe’s Companies, Inc.
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