Hardware wholesaler True Value files for bankruptcy and plans to sell to competitors

Wholesale hardware supplier True Value has filed for Chapter 11 bankruptcy and is aiming to be sold to competitor Do It Best by the end of the year.

True Value retail stores, which are independently owned and operated, are not part of the bankruptcy, and the wholesaler said it will continue to supply products to those 4,500 locations. The cult brand has been around for 75 years.

Retail with real added value for the hardware store (Dorann Weber / Contributor/Getty Images)

True Value, which sells hardware, tools, lumber, plumbing and heating supplies and other home improvement supplies, has total liabilities of between $500 million and $1 billion, according to its Chapter 11 filing in Delaware bankruptcy court.

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“After a thorough evaluation of strategic alternatives, we have determined that selling our business is the right path to maximize value and best serve our retail partners and other stakeholders moving forward,” said Chris Kempa, CEO of True Value .

The sun sets over the brightly lit True Value hardware store in Rangely, Colorado on December 5, 2017. Wholesaler True Value Co., which sells products to 4,500 independent True Value retail locations, filed for bankruptcy on Monday. (Elen H. Richardson/The Denver Post via Getty Images / Getty Images)

“We believe that starting the process with an agreed offer from Do it Best, which has a similar decades-long experience in the home improvement sector and also focuses on supporting members and helping them grow, is the most beneficial next step for “True Value and our employees, customers and supplier partners,” Kempa added.

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Do It Best, based in Fort Wayne, Indiana, agreed to serve as a “stalking horse” bidder for True Value's assets, meaning True Value remains open to higher offers. Do It Best agreed to pay $153 million in cash, assume about $45 million in contracts and other obligations and hire some True Value employees.

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“A successful acquisition of True Value assets would be a strategic milestone for Do it Best and home improvement retailers worldwide,” said Dan Starr, President and CEO of Do it Best. “Do it Best has a proven track record of increasing… Profitability through the most efficient operations in the industry. This acquisition, if completed, would provide True Value and independent home improvement stores with the greatest growth opportunities in the coming years.”

Reuters contributed to this report.