Home Depot Supply Unit Sale Being Restructured & Share Tender Modified Lower (HD)

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Home Depot (NYSE:HD) broke the news this morning that it is in discussions with private equity firms Bain Capital, Caylyle, and with Clayton Dubilier & Rice over restructuring its previously agreed to sale of HD SUPPLY.  This says the discussions could result in material change to the prior terms and financing of the sale of HD SUPPLY.  That includes a reduction in the $10.325 Billion sale price. Obviously these firms are going to have to contribute more of their own capital and the amount of leverage available is ratcheting down drastically.

The company is also modifiying its Dutch tender offer announced on July 10.  The $39 to $44 price is being lowered to a $37 to $42 price range and is extending the date to August 31, 2007.  The only good news is thatthe tender offer is not subject to the HD SUPPLY sale.  Shareholders who tendered between $39 and $42 will not need to take action if already done, but shareholders which tendered in the $42.25 to $44 will not be valid  and those will need to be re-tendered at new prices.

Here are the supplemental details in SEC Filings and you will want to verify any specific terms in there other than these summary terms.  As of August 8, the number of shares tendered were 3,052,214.

Shares of Home Depot are now down almost 5% pre-market around $36.00 on a day already hosed by the BNP Paribas hedge fund lock-ups and inability to value.  This is now back to within 10% of the stock’s 52-week lows of $33.07 again.

Jon C. Ogg
August 9, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.