June 20, 2007 in Business

Home Depot to sell wholesale unit

Associated Press The Spokesman-Review
 

ATLANTA — The Home Depot Inc. announced Tuesday it will sell its wholesale distribution business to a group of private equity firms for $10.3 billion over the objection of some shareholders.

The board of the world’s largest home improvement store chain approved the sale of Home Depot Supply to Bain Capital Partners, The Carlyle Group and Clayton, Dubilier & Rice. The sale is expected to close later this year.

The board also authorized a $22.5 billion increase in the company’s share repurchase program.

“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,” Chief Executive Frank Blake said in a statement.

Atlanta-based Home Depot said Feb. 12 it was considering shedding Home Depot Supply as it focuses on its core retail business. The supply unit serves contractors, homebuilders and other business customers.

“We as a company are solely focused on retail,” Chief Financial Officer Carol Tome said Tuesday, adding that proceeds from the sale will be invested back in the retail business, including investing in existing stores and building new ones.

At the company’s annual meeting last month, some shareholders prodded the company to keep the unit, Blake told reporters after the meeting.

The division has more than 26,000 employees, with revenues of $12.1 billion in 2006.

The bulk of its operations are in Orlando, Fla.

Tome said she wasn’t aware of any plans by the new owners to reduce the work force.

In recent years, Home Depot, the world’s largest home improvement store chain, acquired several companies to create the division.

When Blake became chief executive this year, he decided to review the division and consider a sale or other alternatives.

The company said it will fund the $22.5 billion share repurchase with the proceeds from the sale of Home Depot Supply, existing cash on hand and by issuing $12 billion in senior unsecured notes.

Home Depot shares gained $2.22, or 5.8 percent, to $40.49 in after-hours trading. Before the announcement, shares gained 31 cents to end the regular session at $38.27.


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