National hardware chain Lowe’s plans to buy out California retailer Orchard Supply Hardware, both companies announced Monday.
North Carolina-based Lowe’s plans to acquire Orchard Supply for about $205 million in cash, as well as assume debt owed to nearly all of Orchard Supply’s partners.
Both companies say Lowe’s plans to keep at least 60 of the 90 Orchard Supply stores open and operating under the same name and management.
What that means for each store’s Sonora location is unclear.
Orchard Supply and Lowe’s are two of the largest hardware stores in Tuolumne County, and the local Orchard recently expanded its location to include an outdoor garden center.
Orchard Supply management in Sonora on Monday referred questions to the company’s corporate headquarters.
Orchard spokeswoman Leigh Parrish in North Carolina said late Monday that Lowe’s will undergo a “review of stores” before deciding. Orchard officials said they expect the process to take about 90 days.
“It’s really too early to speculate about how many locations or which locations” will remain open, Parrish said.
Orchard Supply filed a voluntary Chapter 11 bankruptcy petition on Monday so the offer from Lowe’s will become the “stalking horse” bid for an auction of Orchard’s assets. Such a bid sets the floor for an auction process that lets competitors make better offers.
The Lowe’s bid must survive the auction and receive bankruptcy court approval. Lowe’s officials said alternative bids must top Lowe’s offer by at least $12 million.
Orchard stores are smaller than Lowe’s, with about 36,000 square feet of selling space compared with 113,000 square feet for Lowe’s. Orchard Supply, headquartered San Jose, was spun off from Sears Holdings Corp. in January 2012, and most of its locations are in densely populated California markets.
If the local Orchard does not survive, it would be the second major hardware store in Sonora to close in as many years. Andy’s Hardware shut its doors in 2011 after more than 50 years of operating on Greenley Road.
Lowe’s Chairman and CEO Robert A. Niblock said in a statement that Orchard’s business has potential but also has been burdened with high debt.
California has been a strong market for home improvement retailers recently. In its most recent earnings report, Lowe’s reported net income that rose 3 percent but missed expectations, hurt by a rainy and cool spring.
However its larger rival, Home Depot Inc., with a bigger presence in California, reported better-than-expected results.
The Associated Press contributed to this report.