Home Depot Unit Sold for Far Less in Tight Market

[RamboLiberal]

Source: NY Times

Home Depot was forced to drop the sale price of its commercial supply business by nearly $2 billion yesterday, according to people involved in the negotiations, one of the first big buyouts to be renegotiated as a result of the recent tightening of credit and problems in the housing market.

The refashioned deal cut the sale price roughly 18 percent, to $8.5 billion. Because the deal relies heavily on debt, investors and bankers have been watching it closely for signs of how new limits on credit could affect other large buyouts that are still pending and are worth nearly $400 billion collectively.

Still, this deal is different in that the fortunes of Home Depot Supply, as the division is called, are tied closely to the housing market, which has also been weakening.

After a series of all-night negotiations to save the deal, Home Depot and the participating banks and buyout firms were all forced to put up more money to shore up the financing. The parties involved in other pending deals could find themselves in a similar position as buyout firms drag sellers back to the negotiating table. That could put a damper on the buyout boom that has been a major factor in the runup in stock prices over the last few years.


Read more: http://www.nytimes.com/2007/08/27/business/27depot.html?_r=1&hp=&adxnnl=1&oref=slogin&adxnnlx=1188187790-+K9knikrBCAFM1PXjzSpXw

[Lithos]

1. Interesting...

This will definitely repeat itself though I've a suspicion that this will be a rarity as it was completed mostly to avoid the lawsuits which were riskier than completing the deal as planned. Other deals may not carry this risk and will likely fail to avoid taking the up front bath.

L-

[Eagle_Eye]

2. There was no republican tax cut

The republicans were extracting money from the economy by orchestrating a 'housing bubble' through easy credit. Now that there is no more money to pull out of the domestic housing market, bush and his cronies are dropping the matter like a hot potato.

The people still in the housing market are about to get hammered by the economic policy (or complete lack of any oversight of the housing market) fostered by the republicans.

Thank you george bush for leaving another mess for the Progressive Democrats to clean up.