Saturday, July 27, 2013

Hardware Story

Over the past decade in Germany, there are basically four major hardware stores throughout the country: Obi, Hornbach, Praktiker, and Max Bahr.  There might be another dozen medium-sized franchises throughout Germany, but those four were the kingpins of selling nails, screws, lumber, etc.....to the German public.

Well....Praktiker got itself into various economic issues.  It's hard to say if bad management triggered it or just plain dumb-luck....but they've gotten into bankrupt status.  Strangely enough.....Praktiker owns Max Bahr (it's best not to ask how this all occurred), but for weeks....the business community thought that Max Bahr had the ability to thrive and still survive while it's owner....Praktiker....fell into some deep pit of economic woe.

This week....the holders of credit to Max Bahr got nervous, and their pit of economic woe opened up.  They will follow their parent.....into a bankrupt status.

What happens now?  Courts will step in and some government relief will be given to both as they step through this process.  Both could survive.....although on a small scale.  Both could be sold off.  Both could reach a point where nothing will work and they just get dissolved entirely.  The court will appoint someone to figure the best route.

The positive for Obi and Hornbach?  They've got a huge advantage over the market now.

How did Praktiker and Max Bahr fail?  This would make an interesting tale.....if someone would simply talk.  I'm guessing management made some bold and bad decisions.....losing cash and customers.  We may never know the path to their destruction.

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