Lowe’s Companies Inc. (Mooresville, N.C.) has entered into an asset purchase agreement with Orchard Supply Hardware (San Jose, Calif.), under which Lowe’s will acquire the majority of Orchard’s assets for approximately $205 million in cash, plus the assumption of payables owed to nearly all of Orchard’s supplier partners.
On Monday, Orchard filed for Chapter 11 bankruptcy protection.
Upon completion of the transaction, the acquisition will enable Lowe’s to expand through a new store format and reach a new customer base in California with the addition of Orchard’s smaller-format metro store locations. Lowe’s plans to have Orchard operate as a separate, standalone business, retaining its brand under the leadership of Orchard’s current management team.
Orchard currently operates 91 neighborhood hardware and garden stores primarily located in densely populated markets in California. Under the terms of the transaction, Lowe’s would acquire at least 60 of these stores based upon further due diligence on the locations.