Tractor Supply Buys Orscheln Farm & Home for $320 Million

Tractor Supply Co. said a federal regulator has approved its purchase of Orscheln Farm & Home, a smaller rival in the rural-lifestyle retail business, after a year and a half of negotiations and lobbying by state attorneys general.

Tractor Supply said Tuesday it will pay $320 million for the 166 stores, the largest acquisition in the company’s history. It will only keep 81 stores as part of an agreement with the Federal Trade Commission, which includes the sale of 12 locations to Buchheits, a small home-improvement and farm and ranch retailer, and 73 locations to Bomgaars, another small retailer in the category, said Hal Lawton, chief executive of Tractor Supply, in an interview. 

Tractor Supply will receive $72 million for the sale of those stores, he said.

The Federal Trade Commission’s approval comes on the final day the regulatory body could block the purchase under an antitrust review, according to a Tractor Supply spokeswoman. Tractor Supply plans to close the deal Wednesday.

The FTC said Tuesday it approved the deal, including the divestitures, as well as a monitor to oversee compliance with the purchase agreement, among other measures.

Tractor Supply announced the purchase early last year. The company was interested in the deal, in part, because Orscheln’s mostly Midwestern store base complements Tractor Supply’s roughly 2,000 store locations, Mr. Lawton said. “Many of these markets really are a one-store kind of market, and they got there first so we never built,” he said. 

Tractor Supply had expected to be required to sell a large number of stores to get the deal approved, Mr. Lawton said. But “we did not anticipate it taking this long,” he said. 

In May, seven Republican attorneys general signed a letter that asked the FTC to approve the deal and described concern about the process, saying it took too long and didn’t take into account all the retailers Tractor Supply and Orscheln compete with in rural areas such as big-box stores or feed and grain co-ops. 

Tractor Supply’s sales have risen steadily throughout the Covid-19 pandemic as people spent more time outside major metropolitan areas fixing up their homes and yards or tending to animals. 

The company plans to spend between $750,000 and $1 million to rebrand and renovate the Orscheln stores over the next 12 to 15 months, said Mr. Lawton. Orscheln stores’ sales per square foot and operating profit are lower than the average Tractor Supply store, leaving room for growth, he said.