True Value Acquisition: Key Details, Impact, and What Comes Next

Do it Best has successfully acquired True Value, marking a significant milestone in the home improvement industry. This acquisition creates the largest network of independent home improvement stores globally, encompassing over 8,000 members. The integration of True Value's assets, including inventory and paint manufacturing facilities, is expected to enhance operational stability and support substantial growth for both entities.

What Is True Value?

Founded in 1948, True Value is a prominent hardware store chain offering a diverse range of products, including automotive, building materials, electrical, hardware, and paint. Unique in its market, True Value stands out with its network of independently owned and operated stores, a comprehensive rewards program, and extensive DIY project guides. The company also fosters strong community ties through the True Value Foundation and local store engagement, enhancing its appeal to customers seeking personalized service and community involvement.

Who Acquired True Value?

Do it Best operates as a cooperative supporting independent home improvement business owners. It offers a comprehensive range of hardware products, lumber, and building materials, serving as a total solution provider for independent lumber dealers. Additionally, the company supplies MRO needs through a network of commercial industrial distributors and supports thousands of affiliated stores in over 50 countries. Known for its extensive product offerings and international presence, Do it Best is a significant player in the hardware and building materials industry.

When Was True Value Acquired?

Do it Best completed the acquisition of True Value on November 22, 2024. This strategic move comes amid significant consolidation in the home improvement industry, positioning Do it Best as the largest cooperative in the sector. The timing aligns with True Value's Chapter 11 bankruptcy proceedings, highlighting a trend where larger companies acquire struggling competitors to enhance market presence and operational stability. This acquisition reflects the industry's response to competitive pressures and the need for increased resources to support independent retailers.

Why Was True Value Acquired?

• Market Expansion: The acquisition of True Value by Do it Best effectively doubles the size of Do it Best, bringing more than 4,500 independently owned hardware retailers under its umbrella. This expansion creates the world's largest network of independent home improvement stores, significantly enhancing Do it Best's market presence and capability to support independent retailers.
• Technology Integration: The leadership team for True Value includes Bill Habegger as Vice President of Information Technology, indicating a focus on integrating and possibly upgrading the technological infrastructure. This integration aims to streamline operations and support the combined entities' growth and efficiency.
• Competitive Advantage: The acquisition positions Do it Best as the largest cooperative in the home improvement space, providing a competitive edge through increased scale and operational stability. The integration of True Value's significant assets, including inventory, brand rights, and paint manufacturing facilities, enhances Do it Best's capabilities and market presence, ensuring long-term success and support for independent retailers.

Acquisition Terms

• Acquisition Price: Nearly $200 million, including an initial cash offer of $153 million and the assumption of up to $45 million in additional liabilities.
• Payment Method: The transaction was completed with a combination of cash and debt assumption.
• Key Conditions or Agreements:
  • True Value will operate as a separate subsidiary under Do it Best.
  • The acquisition was initiated after True Value's private equity owners expressed interest in selling the wholesaler, which had filed for Chapter 11 bankruptcy.
  • Do it Best served as the "stalking horse" or lead bidder in the acquisition process.
  • The acquisition includes True Value's inventory, brand rights, and paint manufacturing facilities.
  • A new leadership team has been established for True Value, with Dent Johnson as president.
  • There is a commitment to maintaining high-quality service and ensuring a smooth transition for both Do it Best and True Value retailers.

Impact on True Value

The acquisition of True Value by Do it Best has led to significant changes in operations and management. True Value will continue to operate as a separate subsidiary, ensuring continuity and stability. A new leadership team has been established, with Dent Johnson appointed as President of True Value. This team includes various vice presidents and directors responsible for different operational areas, aiming to streamline processes and enhance efficiency. Additionally, the headquarters of True Value has effectively moved from Chicago to Fort Wayne, marking a new chapter in its operational history.

The integration of True Value's assets, including inventory, brand rights, and paint manufacturing facilities, is expected to bolster Do it Best's product offerings and services. This move aims to leverage new efficiencies and deepen vendor relationships, ultimately enhancing the support provided to independent retailers. While specific details on employee and customer reactions are limited, the emphasis on maintaining high-quality service and a smooth transition suggests a positive outlook. For founders considering business transitions, tools like Sunset can assist in managing such processes compliantly, ensuring a seamless and efficient transition.