True Value, the hardware wholesaler, has announced it is filing for Chapter 11 bankruptcy as it prepares to sell its business to competitor Do It Best.

According to a press release from True Value, which is based in Chicago, all of its 4,500 locations will remain operational during the bankruptcy proceedings since they operate independently. The long-established company, in business for 75 years, initiated this process to finalize a deal with Do It Best, which has proposed a cash offer of $153 million to acquire the business, according to Reuters.

True Value offers a range of home improvement products, including tools, lumber, and plumbing supplies. The company cited declining sales, a trend affecting many in the industry, as a major reason for its bankruptcy filing. It has estimated its total liabilities to be between $500 million and $1 billion, as reported by Reuters, referencing its bankruptcy petition.

“We have decided that selling our business is the best way to ensure value maximization and to properly support our retail partners and stakeholders going forward,” stated True Value CEO Chris Kempa. “We believe moving ahead with a proposed offer from Do It Best, who shares a long history in home improvement and focuses on supporting members for growth, is the most advantageous choice for True Value.”

Do It Best emerges as the leading bidder for True Value

As part of the arrangement with Do It Best, the rival in home improvement will act as a “stalking horse” bidder for True Value. This means that while Do It Best will be the main bidder, True Value is open to receiving better offers.

In addition to the $153 million cash offer, Do It Best would assume around $45 million in contracts and other responsibilities, and bring on some True Value staff, as reported by Reuters.

Do It Best is a cooperative wholesaler providing lumber and hardware to independent retailers. The company announced that acquiring True Value would establish a global network of over 8,000 stores across the U.S. and more than 50 countries worldwide.

The deal with Do It Best is anticipated to close by the year’s end.

“We recognize the distinctive hardships faced by retailers, and should our bid for these assets be successful, we are committed to fostering the growth of True Value stores in conjunction with our esteemed member-owners,” stated Dan Starr, President and CEO of Do It Best. “This acquisition signifies not only the expansion of Do It Best but also a promising future for the entire independent home improvement market.”

Retailers facing bankruptcy challenges

Much like numerous other retailers, True Value has struggled with falling sales due to increasing prices and a decrease in consumer spending.

The company joins a list of notable chains that have filed for bankruptcy since the COVID-19 pandemic, including LL Flooring, Red Lobster, Rite Aid, Bed Bath & Beyond, and Christmas Tree Shop. Most recently, discount retailer Big Lots announced its bankruptcy and subsequently closed hundreds of stores since July.

Other retailers have also been closing locations to reduce “underperforming” sites. Chains like Hooters, Walgreens, Sears, Kmart, J.C. Penney, and even Disney Stores have all shut down stores nationwide since 2020.

This article has been updated to fix a typographical error.