Consortium pays $10bn for Home Depot division

The Carlyle Group, Clayton Dubilier & Rice and Bain Capital have teamed up to pay $10.3 billion for the wholesale distribution business of Home Depot, the world’s largest home improvement retailer.

Three US private equity firms have joined forces for the first time to buy HD Supply, the wholesale business of US retailer Home Depot, in a deal that values the division at $10.3 billion (€7.7 billion)

The consortium comprises The Carlyle Group, Clayton Dubilier & Rice and Bain Capital, who are working in tandem for the first time. The sale, which is not conditional on financing arrangements, is expected to close in the third quarter of this year.

The three firms trumped a bid by Thomas H. Lee Partners and CCMP Capital, according to a report in The New York Times.

HD Supply is the wholesale distribution arm of US-based Home Depot, the world’s largest home retailer, providing building materials for contractors. In February, the company said it was exploring strategic alternatives for the business, and retained Lehman Brothers as its financial advisor.

CD&R has made similar investments in electrical product distribution firms Rexel and Wesco Distribution. A source said the private equity firm had previously looked into purchasing construction materials distribution company Hughes Supply, which was last year acquired by Home Depot for $3.4 billion and combined with its HD Supply division.

HD Supply employs more than 26,000 workers in the US and Canada and has annual revenues of approximately $12 billion.

Home Depot said it would use the proceeds from the sale to part-fund a $22.5 billion share buy-back program. Last year the US retail giant, which employs more than 350,000 people worldwide, recorded overall sales of $90.8 billion and earnings of $5.8 billion.