The Financial Times has reported that the buyers of HD Supply want a more than $1 billion price cut to the agreed-upon $10.3 billion purchase price. The parties recently moved the closing date for the sale by Home Depot  ; back to Thursday, Aug. 23 -tomorrow.
The paper reported that one market investor expects the new price could be closer to $8.5 billion, a sentiment echoed earlier this month by industry analysts.
At the original price of $10.3 billion, the buyers would have paid 10X-12X EBITDA. Tightening credit markets forced the deal-makers back to the table.
The buyers would have to pay a $310 million break-up fee if they decide to walk away from the deal, FT said.
Home Depot announced at the end of June that it had agreed to sell its $12 billion wholesale business to a trio of private equity firms Bain Capital, The Carlyle Group and Clayton, Dubilier & Rice for $10.3 billion. The firms are splitting the investment equally.
More on M & A valuation trends can be found in the MDM Special Report: Distribution M & A 2007 Update. Or check out the CD from our latest M & A audio conference – Distribution M & A 2007 Update: More Buyers, New Drivers in U.S & Overseas