Orchard Supply cancels auction, to seek OK of $205 million Lowe's bid

By Caroline Salls

Pittsburgh, Aug. 12 - Orchard Supply Hardware Stores Corp. plans to proceed toward completing its previously announced acquisition agreement with Lowes Cos., Inc. after completing a court-approved marketing process, according to a company news release.

Lowe's was named as the stalking horse bidder on June 17, agreeing to acquire the majority of Orchard's assets for $205 million in cash, plus the assumption of payables owed to nearly all of Orchard's supplier partners.

Under the terms of the agreement, Orchard will operate as a separate, standalone business at the completion of the sale process, retaining its brand, management team and associates.

The company said it also will benefit from the financial stability of its new corporate parent, which, combined, with the benefits of its balance sheet restructuring, will allow Orchard to continue its repositioning and growth strategy.

Competing bids were due by 4 p.m. ET on Aug. 9.

Orchard said it held discussions with a number of potential buyers but did not receive any qualifying bids in advance of the deadline.

As a result, the Aug. 14 auction will not be held, and the company will ask the court to approve the sale to Lowe's at an Aug. 20 hearing.

Orchard said the sale will be completed by the end of August.

"Lowe's submitted a bid at the start of the sale process, which we believe reflects their understanding of our value proposition, our unique market opportunity and how our businesses complement one another," Orchard president and chief executive officer Mark Baker said in the release.

"We look forward to continuing to execute on our repositioning and growth strategy with their ongoing support and believe this acquisition will lead to a very bright future for Orchard."

Store closings

As part of its ongoing Chapter 11 process, the company also identified nine additional stores that will begin store closing sales on Aug. 15.

In addition to the 17 stores that are being closed as part of the Chapter 11 process, Orchard said two stores have closed in the normal course of business since June 17.

The company said it expects to continue operating its remaining 72 stores at the completion of the sale process.

Orchard Supply, a San Jose, Calif.-based hardware retailer, filed for bankruptcy on June 17 in the U.S. Bankruptcy Court for the District of Delaware. Its Chapter 11 case number is 13-11565.

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