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The Boston Globe

Business

Lowe’s bids for a Calif. company

MOORESVILLE, N.C. — Lowe’s plans to expand its California presence with an acquisition of Sears spinoff Orchard Supply Hardware Stores for about $205 million in cash.

Orchard Supply filed for Chapter 11 bankruptcy protection Monday, so the offer from Lowe’s will be the stalking horse bid for Orchard’s assets. Such a bid sets the floor for an auction and spurs competitors to make better offers.

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The California market is key since it has been a strong market for home improvement retailers recently. In its most recent earnings report, Lowe’s reported net income that rose 3 percent but missed expectations, hurt by a rainy and cool spring. Its larger rival, Home Depot Inc., which has a bigger presence in California, reported better-than-expected results.

‘‘This transaction is about the convenience deficit that Lowe’s currently has relative to Home Depot in key metro markets around the US,’’ said Janney Capital Markets analyst David Strasser.

The Lowe’s bid must survive the auction and win US Bankruptcy Court approval.

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