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Home Depot supply division deal price drops 18% to $8.5 billion

Posted by ecoshift on August 27, 2007

Home Depot Hit As Credit Crunch Squeezes Deals – WSJ.com
By HENNY SENDER, DENNIS K. BERMAN and ROBIN SIDEL
August 27, 2007; Page A1

The global credit crunch has begun to put a squeeze on the buyout boom, with banks and private-equity firms forcing Home Depot Inc. to sell its struggling wholesale supply unit for much less than what had been agreed to just two months ago.

Home Depot’s board yesterday agreed to sell Home Depot Supply for $8.5 billion to Bain Capital, Carlyle Group and Clayton, Dubilier & Rice, about 18% less than the price hammered out in June when the buyout boom was at its peak.

In addition, Home Depot itself will hold about 12.5% of the unit’s equity, people familiar with the matter said, and guarantee some of the debt issued by the banks to finance the acquisition. That’s significant because if the banks can’t sell the debt in bond markets, and it sits on their balance sheet, they have to mark down its value, which some can ill-afford to do.

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