Housing
Lowe’s to Complete Acquisition of California Home Improvement Stores
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Lowe’s will acquire 72 of Orchard’s 91 stores in California in exchange for $205 million in cash plus the assumption of accounts payable to nearly all of Orchard’s suppliers.
Orchard Supply came public in January 2012, as a spin-off from Sears Holdings Corp. (NASDAQ: SHLD). The initial public offering price was $25 a share. The company had about 6.03 million shares outstanding. Accounts payable at the end of February totaled $39.66 million, and Orchard had $262.31 million in short/current long-term debt. The company’s long-term debt totaled $46.95 million. Orchard filed for bankruptcy protection on the same day that Lowe’s made its offer to acquire the company.
Lowe’s CEO said:
Strategically, the transaction will provide Lowe’s with an attractive opportunity to increase our store footprint in California, where we are currently underpenetrated, through a neighborhood store format that is complementary to our strengths in big-box retail. Orchard’s hardware and garden stores have a loyal customer base and are situated in high-density, prime locations that are difficult for larger format retailers to enter. We see significant potential for Orchard as a standalone business within Lowe’s portfolio, and we look forward to the opportunity to participate more fully in California’s economic recovery.
Shares of Lowe’s stock are inactive in premarket trading and closed at $45.68 on Friday, in a 52-week range of $25.97 to $46.25.
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