Investing
Home Depot Cuts Price Of Supply Unit And Guarantees Some Debt
Published:
Last Updated:
For Home Depot (HD), it is the worst of all worlds. After getting private equity interests to agree to buy the company’s wholesales unit, Home Depot Supply, for $10.3 billion, the deal ran into hurdles as banks refused to loan money for the transaction. Credit markets have become to tight, and businesses that sell products into the housing market are in too much trouble.
According to The Wall Street Journal, HD will drop the price of the unit to $8.5 billion, almost 20% less than the original deal. And, HD will guarantee $1 billion of the debt taken on by the purchasers.
As 24/7 Wall St wrote earlier, the deal is not worth doing for HD. It is better off to keep the wholesale operation and turn it around itself. The lenders on the deal must have seen it the same way. The Journal writes that "banks were so desperate to avoid taking a hit on the debt that they offered to pay the private-equity firms’ $300 million "walkaway" fee to Home Depot if the deal was scuttled>"
Everyone would have been better off if that had happened.
Douglas A. McIntyre
Want to Retire Early? Start Here (Sponsor)
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
