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Home Depot amends agreement for sale of HD Supply, lowering price
By Lisa Kerner
Charlotte, N.C., Aug. 28 - The Home Depot, Inc. amended the purchase and sale agreement for its HD Supply business to a private equity consortium, resulting in a lower purchase price of $8.5 billion.
The Home Depot will now purchase a 12.5% equity interest for $325 million and guarantee a $1 billion senior secured loan of HD Supply, according to the company's news release. Home Depot expects to close the deal on Aug. 30 and net proceeds of some $7.9 billion in cash.
On Aug. 9, Home Depot reported the possibility of "material changes" to the terms and financing of the HD Supply transaction, including a reduction in the $10.33 billion purchase price.
Merrill Lynch, JPMorgan and Lehman Brothers provided the consortium revised debt commitment letters for 100% of the third-party debt financing as part of the amendment. Members of the consortium include affiliates of Bain Capital Partners, the Carlyle Group and Clayton, Dubilier & Rice.
"Despite the softness in the financing and residential construction markets, the terms of the HD Supply sale deliver shareholder value today and in the future as we will share in HD Supply's upside potential," Home Depot chairman and chief executive officer Frank Blake said in the release.
"We are now focused on our retail business."
The sale of HD Supply is not expected to have a material impact on Home Depot's 2007 financial results. Goldman, Sachs & Co. advised the company on the amended purchase and sale agreement.
Home Depot is an Atlanta-based home improvement retailer. HD Supply distributes wholesale construction, industrial and maintenance supplies.
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