Tractor Supply Company reported that it has received Federal Tade Commission (FTC) clearance for its acquisition of Orscheln Farm and Home.
Under the terms of the agreement, Tractor Supply is purchasing 166 Orscheln Farm and Home stores for approximately $320 million in an all-cash transaction. The deal is expected to close today, Oct. 12.
As part of an agreement reached with the FTC, Tractor Supply is divesting 85 of the acquired stores to two buyers, Bomgaars Supply, Inc. (73 stores) and Buchheit Enterprises, Inc. (12 stores), shortly after closing the transaction.
Tractor Supply will retain 81 stores at a net purchase price of stores retained is approximately $238 million.
The proceeds of the store divestitures will be approximately $72 million, Tractor Supply said. The acquisition is also expected to generate an estimated future tax benefit of approximately $20 million.
Prior to the acquisition, Orscheln Farm & Home operated 166 stores located in 11 states including Missouri, Kansas, Nebraska, Iowa, Indiana, Oklahoma, Arkansas, Texas, Kentucky, Illinois, and Ohio. The company's corporate office is located in Moberly, Mo., where it also maintains a distribution center.
Tractor Supply said it has agreed to sell the Orscheln Farm and Home corporate headquarters and distribution center to Bomgaars for approximately $10 million within 15 months after the closing of the transaction.
“Today is an important day for Tractor Supply as this acquisition expands our ability to better serve our customers in the Midwest,” said Hal Lawton, Tractor Supply president and CEO. “We are committed to providing customers in the region with an elevated product assortment, a meaningful loyalty offering, an enhanced digital shopping experience and so much more that Tractor Supply is able to offer.”
Lawton said the “remedy” to the transaction and the action from the FTC took “longer than anticipated.”
“We are very pleased with the high-quality locations that will be converted to Tractor Supply stores,” Lawton noted. “We are honored to build on the legacy of Barry Orscheln and the team.”
Tractor Supply first announced the acquisition of Orscheln this past February. But in April, the FTC requested additional materials regarding the purchase.
“Importantly, Tractor Supply is on track to achieve several monumental milestones in the growth of our company including annual revenues in excess of $14 billion, a store base of over 2,100 Tractor Supply locations and a highly engaged workforce of 50,000 Team Members,” Lawton said.
Here are a few more highlights from the deal:
- For the fourth quarter and fiscal 2022, the revenue from the acquisition is anticipated to add about $75 million to Tractor Supply’s net sales. Given the transaction expenses and early implementation costs to be recorded in the fourth quarter of 2022, the impact of the acquisition is expected to be relatively neutral to operating income in the quarter and for the year.
- For fiscal 2023, the revenue from the acquisition is anticipated to add at least $300 million to Tractor Supply’s net sales and be accretive by at least $0.10 to diluted earnings per share. This considers anticipated integration expenses that will partially offset accretion in year one of the acquisition.
- Over the course of the next 15 months post-closing, the stores retained by Tractor Supply will be remodeled to the Tractor Supply brand.
- The Company is raising its outlook for store growth opportunities to 2,800 locations, an increase of 100 stores.
- Post-closing, the Company estimates it will have annual revenues of over $14 billion, more than 2,100 Tractor Supply stores, and 50,000 Team Members.
Tractor Supply Company will release its third quarter 2022 earnings release before the market opens on Oct. 20.
As of June 25, the Brentwood, Tenn.-based farm and ranch retailer operated 2,016 Tractor Supply stores in 49 states along with 178 Petsense by Tractor Supply stores in 23 states.
“With a shared culture and values, we are excited to welcome the team to Tractor Supply and look forward to an exciting future going forward,” Lawton said. “We are honored to build on the legacy of Barry Orscheln and the team.”