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Home Depot Warns of Deal-Price Cut

The retailer also lowers the price of its Dutch tender offer.
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Home Depot

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shares tumbled 6% early Thursday after the retailer said the three

private-equity firms buying its supply unit may cut the $10.33 billion price for the deal.

The Atlanta-based home improvement giant, citing current financial-market conditions, also said it may cut the price of its planned Dutch tender offer.

The news comes as the U.S. financial markets are seeing liquidity dry up amid ongoing troubles in the subprime mortgage market. The problems have hurt financings for certain deals and have created worries that private equity's buying binge may slow to a crawl.

Private-equity firms Bain Capital Partners, Carlyle Group and Clayton Dubilier & Rice agreed to buy Home Depot's supply business in June. Home Depot said Thursday that it has begun talks with the firms to restructure the deal, potentially changing financing and reducing the price.

Home Depot also said it has cut the price for its Dutch tender offer, announced in July, to $37 to $42 from the previous price of $39 to $44.

The company, which in conjunction with the supply sale announced a $22.5 billion buyback in June, said it remains committed to its recapitalization.

Shares were down $2.35 to $35.45 in early trading.