Hardware wholesaler True Value has filed for Chapter 11 bankruptcy amid plans to sell its business to its home improvement rival Do It Best.

True Value, based in Chicago, said in a Monday press release that all of its 4,500 stores will remain open during the bankruptcy process because they are independently owned. The 75-year-old company initiated the proceedings in order to enter into an agreement with Do It Best, which has offered to pay $153 million in cash to purchase the business, Reuters reported.

True Value, which sells a variety of home improvement goods like tools, lumber and plumbing, said in bankruptcy court filings that it has succumbed to slumping sales that have affected other companies in the sector. The company, has between $500 million and $1 billion in total liabilities, Reuters reported, citing its bankruptcy petition.

"We determined that the sale of our business was the path forward to maximize value and best serve our retail partners and other stakeholders into the future," True Value CEO Chris Kempa said in a statement. "We believe that entering the process with an agreed offer from Do it Best, who has a similar decades-long history in the home improvement space and also operates with a focus on supporting members and helping them grow, is the most beneficial next step for True Value."

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Do It Best becomes lead bidder for True Value

Under the agreement with Do It Best, the home improvement rival will become a "stalking horse" bidder, according to True Value. That means that while the Fort Wayne, Indiana company is technically the lead bidder, True Value remains open to better offers.

In addition to agreeing to pay $153 million in cash, Do It Best would also take on about $45 million in contracts and other obligations and hire some True Value employees, Reuters reported.

Do it Best is a member-owned wholesaler of lumber and hardware products to independent stores, said in its own press release that the sale would create a worldwide network exceeding 8,000 store in the U.S. and more than 50 countries around the world.

The transaction with Do it Best is expected to close by the end of the year.

“We understand the unique challenges of the retail industry, and if we are successful in our bid for these assets we would be committed to driving True Value stores’ growth alongside our valued Do it Best member-owners,” Do it Best President and CEO Dan Starr said in a statement. “This acquisition would represent not just the growth of Do it Best but a brighter future for the entire independent home improvement channel."

Retailers struggling with bankruptcy

True Value, like many other retailers, has grappled with declining sales amid rising prices and a downturn in consumer spending.

It is now among a handful of prominent restaurant and retail chains that have filed for bankruptcy since the pandemic, including LL Flooring, Red Lobster, Rite Aid, Bed Bath & Beyond and Christmas Tree Shop. Among the latest to do so was discount retailer Big Lots, which has since shuttered hundreds of stores since it announced its bankruptcy proceedings in July.

Other retailers have announced rounds of location closures to cut "underperforming" locations. Hooters, Walgreens, Sears, Kmart, J.C. Penney, and even Disney Stores are among those that have shuttered stores across the nation since 2020.

This story has been updated to correct a typo.

Contributing: Mary Walrath-Holdridge, USA TODAY

Eric Lagatta covers breaking and trending news for USA TODAY. Reach him at [email protected]