New Deal: Home Depot Sells HD Supply for $8.5B

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August 28, 2007

New Deal: Home Depot Sells HD Supply for $8.5B

The Home Depot, Atlanta, GA, officially announced a change in terms for its sale of HD Supply, its $12 billion wholesale unit. The retailer will sell the unit to a trio of private equity firms for $8.5 billion, nearly $2 billion from the original agreement of $10.3 billion.

In addition, Home Depot will purchase a 12.5% interest in HD Supply for $325 million and will guarantee a $1 billion loan to the buyers.

Merrill Lynch, JP Morgan and Lehman Brothers have revised their debt commitment for 100% of the third-party debt financing.

The deal will close Aug. 30, 2007.

Home Depot expects to net $7.9 billion in cash proceeds from the sale.

"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. We are now focused on our retail business," said Frank Blake, CEO of The Home Depot.

Goldman, Sachs & Co. served as the company's financial adviser for the amended purchase and sale agreement.

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