Home Depot Inc, the largest home-improvement retailer, may sell its wholesale unit after investors said the company should get rid of the division because of its low profits.
Home Depot is reversing former chief executive officer Robert Nardelli's plan to get 20 percent of revenue from the division, HD Supply, by 2010. Investor activist Ralph Whitworth had called the unit's expansion "strategic adventurism" and said the Atlanta-based company should exit the business.
Home Depot said it's also studying a spinoff or initial stock offering of the division, which sells lumber to construction companies and furniture to hotels, sending the stock to its highest since April. The unit has US$12 billion in annual sales, about 12 percent of Home Depot's total.
"They've been under pressure from shareholders," said Arun Daniel, a senior analyst at ING Investments LLC in New York.
The firm has US$40 billion in assets, including Home Depot shares.
Home Depot said in a statement it hired Lehman Brothers Holdings Inc as an adviser. Colin McGranahan, an analyst with Sanford Bernstein & Co, wrote in a research note on Monday the unit might sell for as much as US$13 billion.
Home Depot paid as much as US$8 billion to acquire the 38 companies in HD Supply, David Schick, an analyst with Stifel Nicolaus & Co, wrote in a research note on Monday.
Home Depot shares gained US$0.44, or 1.1 percent, to US$41.44, at 4:21pm in New York Stock Exchange composite trading. The company's 5.4 percent note maturing in March 2016 fell US$0.012 on the dollar to US$0.9709 cents, according to Trace, the bond price system of the NASD. The yield rose to 5.82 percent.
CEO Frank Blake, who took over after last month's ouster of Nardelli, wants to revive retail sales that have dropped in older stores for two straight quarters amid a slowdown in the US housing market and competition from Lowe's Cos.
"Investors are focusing on the lower margins in Home Depot's supply segment and have been looking at what Blake might do to address it," said Keith Davis, a Washington-based analyst with Farr Miller & Washington LLC. "Everyone wants to see the stores look more like Lowe's, and there's an opportunity to close that gap."
The firm owns 250,000 Home Depot shares among the US$540 million it manages.
Home Depot built the supply unit through about 40 acquisitions over the past decade, most of them since 2004.
PLA MANEUVERS: Although Beijing has yet to formally announce military drills, its coast guard vessels have been spotted near and around Taiwan since Friday The Taiwanese military is on high alert and is closely monitoring the Chinese People’s Liberation Army’s (PLA) air and naval deployments after Beijing yesterday reserved seven airspace areas east of its Zhejiang and Fujian provinces through Wednesday. Beijing’s action was perceived as a precursor to a potential third “Joint Sword” military exercise, which national security experts said the PLA could launch following President William Lai’s (賴清德) state visits to the nation’s three Pacific allies and stopovers in Hawaii and Guam last week. Unlike the Joint Sword military exercises in May and October, when Beijing provided detailed information about the affected areas, it
CHINA: The activities come amid speculation that Beijing might launch military exercises in response to Lai’s recent visit to Pacific allies The Ministry of National Defense (MND) yesterday said China had nearly doubled the number of its warships operating around the nation in the previous 24 hours, ahead of what security sources expect would be a new round of war games. China’s military activities come amid speculation Beijing might organize military drills around the nation in response to President William Lai’s (賴清德) recent visit to Pacific allies, including stops in Hawaii and Guam, a US territory. Lai returned from the week-long trip on Friday night. Beijing has held two rounds of war games around Taiwan this year, and sends ships and military planes
Five flights have been arranged to help nearly 2,000 Taiwanese tourists return home from Okinawa after being stranded due to cruise ship maintenance issues, the Ministry of Transportation and Communications announced yesterday. China Airlines Ltd (中華航空), and EVA Airways Corp (長榮航空) have arranged five flights with a total of 748 additional seats to transport 1,857 passengers from the MSC Bellissima back to Taiwan, the ministry said. The flights have been scheduled for yesterday and today by the Civil Aviation Administration, with the cruise operator covering all associated costs. The MSC Bellissima, carrying 4,341 passengers, departed from Keelung on Wednesday last week for Okinawa,
US president-elect Donald Trump said he would “never say” if Washington is committed to defending Taiwan from China, but “I would prefer that they do not do it [ an attack],” adding that he has a “good relationship” with Chinese President Xi Jinping (習近平). “I never say because I have to negotiate things, right?” Trump said in an interview with NBC’s Meet the Press host Kristen Welker after saying he would not reveal his incoming administration’s stance on Taiwan’s defense in the event of an attack. Asked the question again, Trump, in a reference to China, said: “I would prefer that they
RSS