Home Depot Inc., Atlanta, has agreed to sell its distribution business, HD Supply, for $8.5 billion, nearly $2 billion less than it originally agreed on, to a group of private-equity firms.
Home Depot said earlier this month that it was in talks to renegotiate the terms of the June agreement with Bain Capital LLC, Carlyle Group and Clayton, Dubilier & Rice Inc., and that the sale price could be reduced.
As part of the amended purchase and sale agreement, Home Depot will purchase a 12.5 percent equity interest in the whole business for $325 million and will guarantee a $1 billion senior secured loan of Home Depot Supply.
Home Depot spent most of last week trying to save the deal, which ended up being renegotiated because tough conditions in credit markets have been making it harder for buyouts to be completed.
The reduced price means Home Depot will have sold the unit for little more than what it had spent to acquire the more than 40 wholesale contracting supply companies that make up HD Supply, according to an article that appeared in the Wall Street Journal.
The HD Supply wholesale division has more than 26,000 employees, with revenue of $12.1 billion in 2006, Home Depot’s core retail unit has been hurt by the soft residential market.