The HVAC operation is the second business Orlando-based HD Supply decided to shed after it agreed to sell its lumber and building materials division to Denver-based building materials distributor Pro-Build Holdings Nov. 30. A trio of private equity firms paid $8.5 billion for HD Supply in August. At the time, the new owners said they intended to continue to pursue acquisitions, but the downturn in the residential construction market likely caused them to reevaluate their plans, said Jonathan Skelly of PCE Investment Bankers. “The sale of their lumber business was a natural,” Skelly said. “The business is just not profitable the way it used to be, so my sense is that they were cutting their losses. Lumber pricing has decreased quite sharply since they acquired those businesses… I think HVAC is a very similar scenario. It’s a more regional business for the company. They do not have a national presence in HVAC.” Skelly said HD Supply’s new owners are likely to examine other businesses in the same light. “I think they’re going to pursue a very similar type of analysis, [in] their electrical business for example,” he said, adding that, like the lumber and HVAC operations, that business is a very regional operation.
HD Supply will hold onto its plumbing assets; however, it is unknown yet what the company will ultimately focus on as it moves forward.