Home Depot to sell US supply arm for 10.3 bln dlrs
. . . This Decision reflects our continued commitment to enhancing shareholder value
WASHINGTON – Home Depot, the biggest US home products retailer, said Tuesday it had reached a deal to sell its wholesale supply arm for 10.3 billion dollars to three private equity firms. The Atlanta, Georgia-based retailing behemoth said in a statement that it would use some of the proceeds to repurchase up to 22.5 billion dollars of Home Depot stock.
Home Depot said it had agreed to sell its supply division to Bain Capital LLC, Carlyle Group and Clayton, Dubilier Rice. All three firms are well established private equity specialists.
“Today’s decision reflects our continued commitment to enhancing shareholder value, through an exclusive focus on our retail business and the return of cash to our shareholders,” said Home Depot chief executive and chairman Frank Blake.
Home Depot said it hoped to close the sale of its wholesale business in the third fiscal quarter of 2007.
The company’s vast box-style stores sell a mass of goods from screws, pipes and doors to kitchen sinks and barbecues, but its wholesale division markets building materials and other products directly to contractors.
The retailer put its wholesale supply division up for sale in February following the departure of its former chief executive Robert Nardelli who had vied to expand the business unit.
Home Depot’s profits have moderated in recent quarters amid a lingering slump in the country’s housing market.
The company is currently run by Blake who was appointed CEO after Nardelli departed under a cloud amid criticisms about his lucrative compensation package.
Private equity firms usually seek to buy distressed businesses, which they then seek to turnaround and sell back to public investors for a tidy profit.