|
|
|
The Latest......
Home Depot Exiting Pro Distributor Business
The Home Depot has entered into an agreement to sell HD Supply to private equity firms Bain Capital Partners, The Carlyle Group and Clayton, Dubilier & Rice for $10.3 billion. The move is designed to let the home improvement dealer focus on its core retail business.
Once seen as an opportunity for growth at the Home Depot, the HD Supply wholesale distribution business grew rapidly through acquisition while Bob Nardelli served as chairman and CEO. With more than $12 billion in annual sales and some 26,000 locations, the unit encompasses companies serving primarily the plumbing, electrical and maintenance industries. HD Supply did make a number of inroads into the lumber and building materials market, however, acquiring Williams Bros., in Georgia, and Cox Lumber in Florida.
Disappointment among shareholders with the performance of Home Depot stock, as well as concerns that it was losing some of its luster in the retail market led the company to begin a strategic review of HD Supply earlier this year. “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,” says Frank Blake, who succeeded the ousted Nardelli as Home Depot chairman and CEO. “This year alone we will spend more than $2 billion in support of our top five retail priorities. We are confident in the ability to improve productivity in our retail business through investment in these priorities, which will further enhance returns on invested capital as the investments take hold,” said Blake.
Meanwhile, the private equity groups acquiring HD Supply see significant growth and consolidation opportunities for the company. “HD Supply enjoys premium positions in an attractive, $400+ billion market where we have deep experience and prior investment success,” says David A. Novak, a partner with Clayton, Dubilier & Rice. “Working with our partners, as well as a strong management team, we are confident that we can achieve multiple strategic and operational improvements to enhance the company’s performance.”
“Management and employees of HD Supply have built tremendous franchises in various building products markets,” adds Dan Pryor, a managing director at Carlyle. “We look forward to working with the company to deliver more value to customers by enhancing and growing these businesses.”
Questions? Comments? Send us your thoughts about this topic by clicking
here.
|
|
|
|
