After months of speculation, 15 roundtable sessions and thousands of individual conversations and emails with members, the votes are in and True Value’s shareholders have overwhelmingly approved the sale of 70 percent of the company’s stock to private-equity firm ACON Investments.
A simple majority of all outstanding shares was required to move forward with the sale. With the proxy period now closed, it appears that more than 80 percent of shareholders voted in favor of the transaction.
“We are more than pleased with the response that our members had to the vote. We are really excited that, in massive numbers, our member shareholders have spoken their minds and more than 80 percent have said yes to this deal,” True Value president and CEO John Hartmann says.
“With this vote, we are going to return more than $200 million dollars in our members’ equity to them that was formerly trapped in the co-op. Members have told me that this is a bold move. A very positive move.”
While rumors of a sale had been circulating within the industry for some time, True Value officially announced the terms of ACON’s bid in March, triggering a 30-day proxy period where members could vote on whether or not to proceed with the transaction. This vote deadline was eventually extended by one week and all votes were counted as of today.
As a result of the deal, True Value’s retail members will receive 70 percent of their invested capital, 100 percent of their promissory notes and their 2017 patronage dividends.
The remaining 30 percent equity in the co-op held by members will be transitioned into stock holdings in the newly created True Value Co., allowing members to share in the value the company plans to create in the partnership, company sources say. The majority shareholder in the new company would then be ACON, which currently owns assets with more than $5 billion in total revenue.
Aside from the equity payout, Hartmann says retailers shouldn’t expect to see any other major changes with their interactions with the company following this vote.
“This transaction represents a change in business structure. It doesn’t change the essence of who or what we are as a company,” Hartmann says. “The marching orders for my team are clear. We are to ensure the continuity of the business and ensure that during this period, when folks will be watching to see what happens, that we show them nothing is changing other than progressing in a positive direction.”
With the close of this deal, True Value’s current members will have no further investment requirements, and new customers would have no investment requirements to do business with the distributor. Retailers will continue to have access to the True Value brand should they choose to leverage it, according to Hartmann.
As far as other services currently provided to member retailers, such as regional advertising, Destination True Value store sets, merchandising and training services, Hartmann says these would all still be available to retailers on a pay-as-you go basis.
Hartmann says he believes that this new model will not only provide more flexibility for current members, but it will also position the new True Value Co. for future growth.
As a full-service distributor with a well-known national brand and no stock requirements, Hartmann says the new True Value Co. will offer retailers a truly unique option.
This move marks the next chapter in the long and venerable history of the True Value Co., one of the industry’s most recognized brands. Even with the change in majority ownership, Hartmann says that the True Value legacy remains intact.
“The essence of what True Value is as an organization isn’t contained in a building in Chicago,” he says. “The essence of True Value is in every one of our stores around the country and around the world. It plays out every day through the interaction between store owners and their customers.”
Hartmann adds that he is very proud of all the True Value team members, its board of directors and the retailers who worked so diligently throughout this transaction and voting period.
“I am so proud of our board and our team and all the work they did to figure out how to unlock our members’ equity,” Hartmann says. “And to the communications and field teams for all their efforts to answer retailers’ questions and provide them with all the information they needed to make an informed decision on this transaction.”
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