Orchard Supply Hardware secures approval of $205 million asset sale

By Caroline Salls

Pittsburgh, Aug. 20 - Orchard Supply Hardware Stores Corp. said the U.S. Bankruptcy Court for the District of Delaware approved the sale of a majority of its assets to Lowes Cos., Inc.

Lowe's will pay $205 million in cash for 72 Orchard stores and assume payables owed to nearly all of Orchard's supplier parties.

According to an Orchard Supply news release, the transaction is expected to be completed by the end of August.

Orchard said it will operate as a separate, stand-alone business with its own brand and a continued commitment to its neighborhood store format.

"With Lowe's support, the team will be better positioned to improve Orchard's infrastructure, further enhance the company's merchandising strategy and grow the business with new neighborhood format stores and remodels," Orchard president and chief executive officer Mark Baker said in the release.

"The management team and I are confident that Orchard has a very bright future ahead."

Management changes

In addition, Orchard said Baker will step down as president and CEO and a member of its board of directors following the transaction. Baker, who accepted a position as president and CEO of the Aircraft Owners and Pilots Association, will be available to advise Orchard for several months.

With Baker's departure following the transaction, Lowe's business development executive Richard D. Maltsbarger will become president of Orchard. The company said he will work closely with Orchard's existing leadership team to lead Orchard's repositioning and growth strategy.

As part of the transition, current chief financial officer Chris D. Newman will also serve as head of development, and Steven L. Mahurin, currently executive vice president merchandising, will be appointed chief retail officer.

Expanded presence

According to a Lowe's news release, the acquisition will enable Lowe's to expand its presence and reach a new customer base in California, where it is currently underpenetrated.

"We are confident that Orchard's talented management team, led by Richard Maltsbarger, will continue to execute their successful repositioning strategy and deliver long-term profitable growth," Lowe's chairman, president and CEO Robert A. Niblock said in the Lowe's release.

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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