With Valspar, Ace shakes up its paint department
Ace Hardware Corp.’s paint program is going through a major makeover with Valspar stepping up as a supplier and taking over the co-op’s paint manufacturing facilities.
Ace and Valspar announced a long-term deal, under which Valspar will manufacture and supply Ace-branded paint products to Ace dealers. The companies also announced that Valspar has acquired Ace Hardware’s paint manufacturing assets, including two manufacturing facilities located near Chicago.
Minneapolis-based Valspar will also make available to Ace dealers a comprehensive line of Valspar-branded paints.
The announcement made no mention of Benjamin Moore, a paint brand which has long had a close relationship with Ace. In an article last month at homechannelnews.com, Benjamin Moore senior VP strategy and retailing Edward Klein told HCN that his company wanted to stay with its “selective distribution” business model. Ace, on the other hand, “[wanted] a national brand that they could sell in all their stores.”
With Valspar, Ace says its dealers can expect quality and performance from Ace-branded paint products while also benefitting from Valspar’s color expertise, enhanced sales support for retailers and a competitively priced product assortment.
Introduction of Valspar paint products is expected to begin in the fall of 2013. Ace will retain ownership of its existing paint brand trademarks, including Clark+Kensington and Ace Paint, but Valspar will manufacture Ace’s product lines exclusively for the retailer.
“Ace Hardware is pleased to enter into a long-term supply relationship with Valspar,” said Ray Griffith, chief executive officer, Ace Hardware Corporation. “Our relationship with Valspar will allow Ace to create an enhanced customer experience that generates more paint sales for our valued owners. We have ambitious goals for our paint category, and this step puts Ace on the path to growing market share in liquid paint and increasing revenue opportunities for all Ace retailers.”
The companies said Valspar will immediately begin manufacturing and distributing Ace’s existing portfolio of Ace-branded paint products. Over the next year, Ace and Valspar will collaborate with retail owners to enhance their paint departments, according to Ace.
Valspar Chairman and CEO Gary Hendrickson, chairman and chief executive officer of Valspar added: “This new business also positions Valspar well for further growth as the U.S. housing market continues to recover.”
Ace points to strategy behind Westlake purchase
Oak Brook, Ill.-based Ace Hardware’s recent purchase of the 85-store Westlake Ace Hardware chain — the co-op’s largest customer — represented “good offense” and “good defense,” according to the co-op’s message to Ace retailers.
The $88 million purchase — roughly $1 million per location — prevents Ace’s competitors from gaining footholds in Westlake’s 33 markets, according to the internal message to dealers posted Dec. 18. “In a changing retail environment where competitors are buying and converting stores away from Ace, we have secured Ace’s largest customer … and in so doing have preserved the great Ace brand in each of these markets and locations,” according to the memo, undersigned by Ray Griffith, CEO, and John Venhuizen, president and chief operating officer.
The move also reflects a “good offense,” in that it allows the co-op to benefit from the management team of Westlake Ace Hardware. The co-op said Westlake Ace CEO George Smith will continue to lead Westlake, which will run independently of Ace Hardware Corp.
“We believe the acquisition of Westlake Ace, while not without risk, is a relatively low-risk investment with the potential for meaningful return,” wrote Griffith and Venhuizen.
The new Westlake Ace will be governed by a board of directors separate from Ace’s own corporate board. It will include Ace retailers Jim Ackroyd and Lori Terpstra, as well as Ace executives Venhuizen and Lori Bossman. Another director will be named later.
The memo also revealed that Westlake’s previous owner, the private equity firm Goldner Hawn Johnson & Morrison, had been trying to sell the 85-store chain for several months. The firm purchased Westlake Ace six years ago.
Co-op buys Westlake Ace Hardware
Ace Hardware Corp. acquired Lenexa, Kan.-based Westlake Ace Hardware for $88 million.
Westlake was named the HCN 2011 Retailer of the Year, and was featured in the May 2011 issue of Home Channel News. Since 2006, the company was owned by a private equity firm — Goldner Hawn Johnson and Morrison.
According to Ace Hardware, the agreement became official for business beginning Dec. 17. Under the deal, Ace becomes the sole owner of the 85-store chain located in 33 Midwest and Sunbelt markets.
Westlake Ace Hardware was founded in 1905 and became part of the Ace co-op in 1959.