HD Supply wholesale distribution business was sold in a joint-purchase from The Home Depot for $10.3 billion.

Bain Capital, a global private investment firm based in Boston, The Carlyle Group, a global private equity firm based in Washington, and Clayton, Dubilier & Rice Inc. (CD&R), a New York and London-based private equity investment firm, have jointly purchased the HD Supply wholesale distribution business from The Home Depot for $10.3 billion.

Each firm will invest equal amounts of equity in the transaction, which is subject to customary regulatory reviews and is expected to close in the third quarter of 2007.

A source close to CD&R said that firm had looked at Hughes Supply when it was up for sale, before it was purchased by Home Depot and rolled into HD Supply. Interestingly, Charles Banks is an operating partner at CD&R. Banks served as president/CEO of Ferguson Enterprises, Newport News, VA, and also as group chief executive at Wolseley plc, Reading, England, before retiring from that company in July 2006. He joined CD&R in 2006. Now that CD&R will be a part-owner in HD Supply, Banks will find himself in competition with his former company.

CD&R has also invested in Rexel Group, a leading distribution network of electrical supplies, as well as in distributors involved in other industries.

HD Supply is the second largest distributor of construction, industrial and maintenance supplies in North America, with 2006 revenues in excess of $12 billion. It has achieved number one positions in five of 12 industry verticals. The company has nearly 1,000 locations in North America and employs 26,000 associates.

Under former chairman and CEO Robert Nardelli, Home Depot built the wholesale construction-supply business through nearly 40 acquisitions totaling more than $7 billion over the past few years. HD Supply sells infrastructure and maintenance products to builders, municipal systems and other businesses, generating about 13% of Home Depot’s sales in fiscal 2006 but delivering 80% of its sales growth.

“HD Supply is a leader in its industry,” Frank Blake, current chairman and CEO of The Home Depot, said in a statement. “We are proud of the business we built and know that it will continue to grow and flourish under new ownership.

“I’d like to thank Joe DeAngelo and the entire HD Supply leadership team for their contributions to The Home Depot.”

Since February, Joe DeAngelo, who most recently was COO and executive vice president at The Home Depot, had continued to oversee HD Supply while assuming additional responsibilities for the retail business. He will remain with HD Supply as its CEO following the acquisition. DeAngelo joined The Home Depot in April 2004 as senior vice president of its PRO business and tool rental. Previously he had served as executive vice president of Stanley works, where he led a turnaround of the business in 2003. Prior to that he served in various executive roles at General Electric.

“This is the right decision for our business, at the right time,” DeAngelo said. “The private equity firms’ decision validates what we at HD Supply already know, that our industry holds tremendous opportunity and the HD Supply businesses have what it takes to lead it: knowledgeable people, long-cultivated relationships and dedication to providing superior customer service. We are fortunate to have 26,000 associates, many of whom have been in this business for generations, devoted 100% to knowing the professional customers’ unique needs and serving them with excellence,” he said.

Steve Zide, managing director of Bain Capital, said in a statement that DeAngelo could drive better execution, growth and profitability now that it won’t be part of Home Depot, which is first and foremost a retailer.

“We will help to drive integration, operating improvement, whether it’s through sourcing opportunities or investing in logistics,” Dave Novak, a partner at CD&R, said in a statement.

An industry source close to the investment firms said he was not aware of any plans to change the name from HD Supply or to sell off any pieces of the business at this time.

“This sale positions our businesses for continued growth and success under new ownership,” DeAngelo said. “Bain Capital Partners, The Carlyle Group and Clayton, Dubilier & Rice are three of the most well-known and respected private equity firms in the world, and together with our HD Supply leadership team, we will build the exciting next chapter in our history.”