Latest News

Aug. 24, 2007 - HD Supply Deal In Jeopardy, Price May Be Lowered By $1 Billion

August 24, 2007
/ Print / Reprints /
ShareMore
/ Text Size+

According to an online Bloomberg report, Home Depot may reduce its original $10.3 billion price tag for HD Supply by about $1 billion in order to salvage the deal.

Negotiations with private equity firms Bain Capital, Carlyle Group and Clayton Dubilier & Rice, and their banks, continued as a midnight deadline approached last night. No announcement was made at that time. According to The Associated Press, talks are still going on today.

The banks - Merrill Lynch & Co., JPMorgan Chase & Co. and Lehman Brothers Holdings - threatened to walk away from the HD Supply deal because of the slump in its business, noted Bloomberg. The worst U.S. housing market in 16 years has slowed home construction, which HD Supply counts on for revenue.

HD Supply accounted for $12.1 billion of Home Depot’s $91 billion in sales last year.

On. Aug. 9, Home Depot said it might need to cut the price of the HD Supply business; later it changed the closing date of the deal from Aug. 16 to yesterday.

“It’s unclear to me if the banks are saying they’re unwilling to lend, or unwilling to lend at a cost acceptable to the private equity guys,” Walter Todd, a principal at Greenwood Capital Associates, told Bloomberg. “Clearly there’s a lot of turmoil in the credit markets right now.”

“If the deal falls through, Home Depot can seek a termination fee from the buyers of more than $309 million under certain circumstances,” said the AP. “One such circumstance is if Home Depot terminates the agreement as a result of the buyers’ breach of its obligations to effect the closing, including a failure to obtain financing.”

The dispute is just an example of the tensions that have surfaced between private equity firms and their lenders as investors’ demands for leveraged buyout debt has weakened, Bloomberg reported.

Home Depot had planned to use the sale proceeds to help fund a stock buyback. If the sale falls through, the company may only buy back $12 billion of its shares, rather than the $22.5 billion it had originally wanted to purchase.

Did you enjoy this article? Click here to subscribe to Supply House Times. Stay connected with us via social media.

You must login or register in order to post a comment.

Multimedia

Videos

Image Galleries

BNP Media's Plumbing Group Visits Grundfos North American Headquarters

BNP Media’s Plumbing Group, comprised of the Plumbing & Mechanical, Supply House Times, PM Engineer (pme) and Reeves Journal brands, recently visited Grundfos’ new North American headquarters building in the western Chicago suburb of Downers Grove, Ill.

8/26/14 1:00 pm EST

Free Webinar: Low Temperature Heat Emitter Options in Hydronic Systems

With proper design, you can create systems that require supply water temperatures no higher than 120° F under design load conditions.

Supply House Times

f

2014 December

The December issue of SHT featured Supply House Times on the Road: AD Chairman and CEO Bill Weisberg talks inspiration at annual meeting; Distributor roundtable: Smart bets; and much more!
Table Of Contents Subscribe

Where do you look for new employees?

Where do you look for new employees?
View Results Poll Archive

The Supply House Times Store

2015.jpg
2015 National Plumbing & HVAC Estimator

Every plumbing and HVAC estimator can use the cost estimates in this practical manual!

More Products

Clear Seas Research

CS-OflRGBhomepage.jpgWith access to over one million professionals and more than 60 industry-specific publications,Clear Seas Research offers relevant insights from those who know your industry best. Let us customize a market research solution that exceeds your marketing goals.

STAY CONNECTED

facebook Twitter Updated icon Youtube Updated icon    LinkedIn Updated icon  Google+

Premier 125

Premier 125 button

The information SUPPLY HOUSE TIMES uses to rank the Premier 125 is the most accurate we can gather. It is primarily based on responses to a questionnaire we send to the wholesalers in our database, supplemented with information obtained from industry reports and estimates.