Lowe’s Cos. (LOW), the world’s second-largest home-improvement chain, will buy 72 stores from Orchard Supply Hardware Stores Corp. for about $205 million after the deal received bankruptcy court approval.
U.S. Bankruptcy Judge Christopher Sontchi, at a hearing today in Wilmington, Delaware, approved Orchard Supply’s sale of virtually all of its assets after no bids surfaced to challenge Lowe’s initial offer.
“I am quite pleased to sign the sale order,” Sontchi said. “It’s a good result.”
Lowe’s, based in Mooresville, North Carolina, is seeking to sell to new customers in a smaller-store layout and add locations in California as the housing market recovers. It operates 110 stores in the most-populous U.S. state, about half as many as larger Home Depot Inc.
“The acquisition will enable Lowe’s to expand its presence,” the company said in a statement today. Orchard Supply is holding going-out-of-business sales at 17 of its 89 stores in the state.
Orchard Supply will operate as a standalone business, according to the statement. Lowe’s expects to complete the deal this month. Lowe’s will provide Orchard with a $68 million infusion, according to Gregory Hesse, a lawyer for Lowe’s.
The new Orchard Supply will have about $399 million in assets and about $126 million in total liabilities, Hesse said. It is expected to generate about $21 million in earnings before interest, taxes, depreciation and amortization.
Orchard Supply, based in San Jose, California, said it sought bankruptcy protection after sales declined as the U.S. slipped into recession in late 2007. The retailer, founded in 1931 as a purchasing cooperative, in June listed $441 million in assets and $480.1 million in debt as of May 4.
To contact the reporter on this story: Michael Bathon in U.S. Bankruptcy Court in Wilmington, Delaware, at firstname.lastname@example.org