HD Supply deal may get lower price tag

As the credit market continues to tighten, Home Depot is working with Bain, Carlyle and Clayton Dubilier & Rice to renegotiate the agreed $10.3 billion sale of its HD Supply Division.

Retail giant The Home Depot said today it will “restructure” the terms of its $10.3 billion (€7.7 million) agreement to sell its HD Supply Division to Bain Capital Partners, The Carlyle Group and Clayton, Dubilier & Rice, possibly resulting in a lower sale price.

Though Home Depot did not explain the decision to restructure the deal, the company cited “current financial conditions”, alluding to turmoil in the subprime and corporate credit markets, when it simultaneously reduced the price of its tender offer to repurchase up to 250 million shares of its common stock.

All four parties involved in the sale declined to comment on the restructuring.

The three private equity firms agreed in June to buy HD Supply, the brainchild of ex-chief executive Bob Nardelli. The division proved less profitable than the company’s leadership had hoped, and in February, one month after Nardelli was ousted in favor of Frank Blake, Home Depot announced that it would consider strategic alternatives for HD Supply. Earlier this week Cerberus Capital Management appointed Nardelli to chairman and chief executive of Chrysler.

Meanwhile, Business Week reported that at the Academy of Management’s annual conference in Philadelphia on Monday, Home Depot’s billionaire co-founder Kenneth Langone said that private equity firms are just looking to “get more juice out of a lemon”, or trying to extract as much money as possible from a company without adding any value.

Langone went on to say the underlying fundamentals of the industry are unchanging.

“It’s kind of like sex,” he said. “There’s nothing new about it.”