Home / World Business
Tue, Aug 28, 2007 - Page 10 News List

Home Depot likely to sell division

AP , ATLANTA, GEORGIA

A trainer gives last-minute instructions to employees prior to the opening of Home Depot's first retail outlet in Beijing, China, on Sunday. Home Depot, the world's largest home improvement retailer, tentatively agreed to sell its wholesale division to a group of private equity firms over the weekend.

PHOTO: AFP

Home-improvement supplies retailer Home Depot Inc has tentatively agreed to sell its wholesale distribution division to a group of private equity firms for US$1.8 billion less than originally planned and will retain a small stake in the unit, a person with direct knowledge of the sale said.

The deal, which also includes Home Depot guaranteeing US$1 billion of the debt the buyers will take on to complete the transaction, was hammered out during several days of talks that continued into the weekend, the person said on Sunday.

The person, who asked not to be identified because he was not authorized to speak publicly, said the revised agreement calls for Home Depot to receive US$8.5 billion in cash instead of the original US$10.3 billion agreed upon in June.

Home Depot will retain a 12.5 percent stake in the HD Supply unit, the person said.

Even though Home Depot is accepting less than anticipated for the unit, the deal is expected to allow it to proceed with its plan to buy back up to US$22.5 billion in company shares.

A Home Depot spokeswoman declined to comment.

The world's largest home improvement store chain had hinted previously that the deal could fall through or that the price would have to be reduced.

Atlanta-based Home Depot had said publicly the deal was not contingent on financing, but there were scenarios under which a party could walk away.

According to a regulatory filing, the agreement could have been terminated at any time prior to the completion of the sale by mutual consent.

When the deal was first announced, Home Depot said it would sell the unit for US$10.3 billion to a group of private equity firms.

But since then, as financial markets have faced turmoil, Home Depot had said it was talking with the buyers about restructuring the agreement, which it said could result in a lower price tag.

The talks were supposed to wrap up on Thursday, but continued for several more days.

Home Depot operates 2,200 stores in the US, Canada, Mexico and China.

This story has been viewed 1880 times.
TOP top