Summary
Lowe's Companies, Inc. (LOW) announced on January 15, 2016, its intention to exercise its put option to exit its joint venture in Australia with Woolworths Limited. This joint venture includes the "Masters Home Improvement" stores and "Home Timber and Hardware Group." The sale process is expected to take approximately 390 days, though Woolworths Limited may accelerate it by exercising its call option. This strategic decision is anticipated to result in a significant non-cash impairment charge in Lowe's fourth quarter of fiscal year 2016, ending January 29, 2016. The exact amount of this charge is currently unascertainable as it depends on the fair market value of the shares, to be determined by January 18, 2016. Lowe's expects to provide a more precise estimate in its upcoming Form 10-K filing and will file an amendment to this 8-K once an estimate is determined.
Key Highlights
- 1Lowe's is exiting its Australian joint venture with Woolworths Limited, which operates "Masters Home Improvement" and "Home Timber and Hardware Group."
- 2The company intends to exercise its put option to sell its stake in the joint venture.
- 3The sale is expected to take up to 390 days, but could be accelerated by Woolworths Limited's call option.
- 4Lowe's anticipates a significant non-cash impairment charge in its Q4 FY2016 results due to this divestiture.
- 5The exact amount of the impairment charge is currently unknown and subject to a valuation process determining the fair market value of the shares.
- 6An amended 8-K filing will be provided once an estimate for the impairment charge is determined.