HD Supply May be Closer to Sale

Three teams of private-equity firms reportedly have formed to consider bids for Home Depot's wholesale distribution business, HD Supply. A sale is expected to generate more than $10 billion in proceeds, according to several news reports.

The first group consists of Bain Capital, Carlyle Group and Clayton Dubilier & Rice, while the second is made up of the Blackstone Group, Kohlberg Kravis Roberts & Co., Leonard Green & Partners and the Texas Pacific Group, according to Modern Distribution Management.

A third team that could consider a bid includes Thomas H. Lee Partners, the buyout unit of Goldman Sachs Group Inc., and CCMP, the former private-equity arm of JPMorgan Chase & Co., according to the Financial Times newspaper, which first reported the teams.

Home Depot announced in February that it was hiring a financial advisor to explore strategic alternatives, including a possible sale of HD Supply. During a news conference Feb. 28, Frank Blake, the new chairman and CEO of The Home Depot, said no decision has been made on HD Supply.

The company has retained Lehman Brothers as its financial advisor to assist in evaulating the company's options. Other alternatives include a spinoff or initial public offering of the business.

Home Depot Supply's 2006 acquisitions of Hughes Supply, Orlando, Fla., and Edson Electric Supply, Phoenix, rocked the electrical wholesaling industry. With nearly 1,000 locations nationwide and in Canada and 26,000 associates, HD Supply serves business-to-business customers such as homebuilders, municipalities and contractors in the construction, commercial, industrial, MRO, utility and public works markets.

In an interview with Electrical Wholesaling magazine in January, HD Supply said it had big plans to grow its HD Supply business. But that was before the resignation of former CEO Bob Nardelli. Blake and some of Home Depot's board members now say the company wants to increase its focus on its retail business.