FTC Approves Tractor Supply’s (NASDAQ:TSCO) $320 Million Orscheln Acquisition

After much delay, leading rural lifestyle retailer Tractor Supply (NASDAQ:TSCO) finally received the Federal Trade Commission’s (FTC) clearance to close its acquisition of Orscheln Farm and Home. The acquisition is expected to be completed today.

The Orscheln acquisition expands Tractor Supply’s presence in the Midwest region. The acquisition, which was announced in February 2021, went through several rounds of negotiations. As per the Wall Street Journal (WSJ), in May, seven Republican attorneys general signed a letter urging the FTC to approve the deal.    

TSCO stock was trending marginally higher in Wednesday’s pre-market trading at the time of writing.

Additional Details on Tractor Supply’s Orscheln Acquisition

Tractor Supply will acquire 166 Orscheln stores for $320 million but will retain only 81 stores and divest the remaining locations as part of its agreement with the FTC. The company will sell 73 locations to Bomgaars Supply and 12 stores to Buchheit Enterprises for total proceeds of nearly $72 million.

Furthermore, Tractor Supply will sell Orscheln’s corporate headquarters and distribution center to Bomgaars for about $10 million within 15 months after the completion of the acquisition.  

The deal is expected to contribute about $75 million to Tractor Supply’s net sales in the fourth and full-year Fiscal 2022. However, it would be “relatively neutral” to Q4 and Fiscal 2022 operating income. Meanwhile, the Orscheln acquisition is projected to add at least $300 million to the company’s Fiscal 2023 net sales and at least $0.10 to diluted earnings per share.

Is Tractor Supply a Good Stock to Buy?

Tractor Supply stock earns the Street’s Strong Buy consensus rating based on nine Buys and three Holds. The average TSCO stock price target of $238.42 suggests 18.8% upside potential from current levels. Shares have declined nearly 16% year-to-date.   

Disclosure