Lowe’s moves closer to OSH acquisition
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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.
Market Recap: RISI Crow’s Construction Materials Cost Index
A price index of lumber and panels used in actual construction for Aug. 9, 2013
*Western – regional species perimeter foundation; Southern – regional species slab construction.
Crow’s Market Recap — A condensed recap of the market conditions for the major North American softwood lumber and panel products as reported in Crow’s Weekly Market Report.
Lumber: Sales activity in the SPF lumber market was spotty and sluggish, but tight supplies of certain items generated some higher pricing. Having purchased much of their August needs, buyers held out in greater numbers. Prices hit a wall in the Southern Pine lumber market, forcing some to recoil, particularly on the Westside. Approaches by mills in that region varied in respect to pricing, dependent on the level of urgency at a particular mill. Much of the pricing in Coastal species lumber remained stable or found higher levels at which to trade. Dry prices were more likely to rise than those in green Doug Fir. Inland lumber producers continued to struggle with broken inventories of most lumber grades but found that #2&Btr was getting more attention from buyers than were the uppers. Radiata Pine prices are stable, although some South American Mldg&Btr has discounted slightly. Ponderosa Pine industrial lumber is “Weak at both edges,” according to one source. The slowing of millwork has led to softening in lower grades of lumber, and more blanks and blocks are being offered. Ponderosa Pine 4/4 boards remain “hot,” as one source noted. Activity for Idaho White Pine boards is less energetic than Ponderosa, due in part to mills being sold out or lacking good tallies. ESLP boards are firm and moving in both #2 and #3 Common. Eastern White Pine boards are nicely balanced between supply and demand August is not expected to be a great month in regard to Western Red Cedar sales volumes. Fill-in activity continued to provide steady business for mills, as yards replenished items while keeping inventories in line with late summer levels.
Panels: The entire continent shows varying degrees of softness in OSB activity and pricing. The presence of secondary product is forcing that level of the market to take aggressive action, putting downward pressure on prices. Sources at Western Fir plywood mills reported a range of activity. Perhaps most indicative of trading levels were price moves, which were few but modestly upward. The Southern Pine plywood market was flat in respect to both price and demand. Although a few mills reported selling close to a week’s worth of production, mill order files, for the most part, remained in the weeks of August 19 and 26. While Canadian plywood producers say prices are “up a couple more,” distributors are very wary about the length of mill files and the implications of a decaying OSB market. August and the slower seasonal sales it generally brings continued to envelope both particleboard and MDF markets.
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