Lowe’s said it made progress toward acquiring the majority of assets of San Jose, Calif.-based Orchard Supply Hardware, including 72 stores.
With no other bids on the table, Lowe’s offer of $205 million in cash plus the assumption of payables owed to nearly all of Orchard’s supplier partners will be presented to the bankruptcy court for approval on Aug. 20.
Lowe’s said it plans to have Orchard operate as a separate, standalone business, retaining its brand under the leadership of Orchard’s current management team.
Lowe’s plans to acquire the locations most complementary to its current strategy and store footprint.
Once completed, the acquisition will enable Lowe’s to expand its presence in California and reach a new customer base through the addition of Orchard’s smaller-format stores in densely populated areas.
Orchard’s stores measure about 36,000 sq. ft. of selling space, compared with 113,000 sq. ft. of selling space for an average Lowe’s home improvement store. Lowe’s currently operates 110 stores in California.
“We are very pleased to be moving forward with the acquisition process,” said Robert Niblock, Lowe’s president and CEO. “Strategically, the transaction will provide Lowe’s with an attractive opportunity to increase our store footprint in California, where we are currently underpenetrated, through a neighborhood store format that is complementary to our strengths in big-box retail. Orchard’s hardware and garden stores have a loyal customer base and are situated in high-density, prime locations that are difficult for larger format retailers to enter. We see significant potential for Orchard as a standalone business within Lowe’s portfolio, and we look forward to the opportunity to participate more fully in California’s economic recovery.”
Lowe’s reached a deal with Orchard Supply back in June after Orchard Supply filed for Chapter 11 bankruptcy.