Home Depot Buys HD Supply Holdings in $8 Billion Takeover Deal

Home Depot paid a $25 premium to HD Supply's Friday closing price in a deal that values the Atlanta-based distributor at around $8 billion.
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HD Supply Holdings  (HDS) - Get Report shares soared to an all-time high Monday after agreeing an $8 billion takeover by Home Depot  (HD) - Get Report.

Home Depot, the world's biggest home improvement retailer, said it would pay $56 a share for HD Supply, which distributes tools and products to the maintenance and construction sector. That's a 25% premium to HD's Friday closing price and values the Atlanta-based group at around $8 billion including group debt. 

Home Depot said the takeover would likely close before the end of its fiscal fourth quarter, which ends in January of 2021. Home Depot sold the HD Supply in the business in 2007 to three private equity groups, lead by Bain Capital LLC, for $10.3 billion.  

"The (maintenance, repair and operations) customer is highly valued by The Home Depot, and this acquisition will position the company to accelerate sales growth by better serving both existing and new customers in a highly fragmented $55 billion marketplace," said Craig Menear, chairman and CEO of The Home Depot. "HD Supply complements our existing MRO business with a robust product offering and value-added service capabilities, an experienced salesforce that enhances the strong team we have in place, as well as an extensive, MRO-specific distribution network throughout the U.S. and Canada."  

HD Supply shares were marked 24.25% higher in pre-market trading Monday immediately following the takeover news to indicate an opening bell price of $55.66 each, and all-time high that would extend the stock's six-month gain to around 88%.

Home Depot shares, meanwhile, were marked 01.25% higher at $280.55 each ahead of its third quarter earnings report Tuesday, during which analysts expected a bottom line of $3.03 per share on sales of $31.8 billion.