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Oak Brook, Ill.-based Ace Hardware’s recent purchase of the 85-store Westlake Ace Hardware chain -- the co-op’s largest customer -- represented “good offense” and “good defense,” according to the co-op’s message to Ace retailers.
The $88 million purchase -- roughly $1 million per location -- prevents Ace’s competitors from gaining footholds in Westlake’s 33 markets, according to the internal message to dealers posted Dec. 18. “In a changing retail environment where competitors are buying and converting stores away from Ace, we have secured Ace’s largest customer … and in so doing have preserved the great Ace brand in each of these markets and locations,” according to the memo, undersigned by Ray Griffith, CEO, and John Venhuizen, president and chief operating officer.
The move also reflects a “good offense,” in that it allows the co-op to benefit from the management team of Westlake Ace Hardware. The co-op said Westlake Ace CEO George Smith will continue to lead Westlake, which will run independently of Ace Hardware Corp.
“We believe the acquisition of Westlake Ace, while not without risk, is a relatively low-risk investment with the potential for meaningful return,” wrote Griffith and Venhuizen.
The new Westlake Ace will be governed by a board of directors separate from Ace’s own corporate board. It will include Ace retailers Jim Ackroyd and Lori Terpstra, as well as Ace executives Venhuizen and Lori Bossman. Another director will be named later.
The memo also revealed that Westlake’s previous owner, the private equity firm Goldner Hawn Johnson & Morrison, had been trying to sell the 85-store chain for several months. The firm purchased Westlake Ace six years ago.