Tractor Supply Closes Acquisition of Orscheln With Remedies for Anti-Competitive Concerns

Narrow-moat Tractor Supply is set to complete its purchase of Orscheln Farm & Home on Oct. 12. Initially, Tractor Supply was set to acquire the entirety of Orscheln's store base (166 locations) for $320 million, a price we view as reasonable at around 1 times sales. Tractor Supply had $531 million in cash as of its June 25 balance sheet date and should have no issues financing this transaction. Given limited direct peers in the farm and home supply category, the Federal Trade Commission mandated the sale of 85 Orscheln locations to Bomgaars and Buchheit to ensure operators across the industry keep quality, selection, and service levels healthy (leaving Tractor Supply with 81 rebranded locations). As a result, the sale of 85 stores, Orscheln headquarters, and Orscheln's distribution center will reduce the transaction price by $82 million for Tractor Supply, capping its outlay at $238 million.