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MarketScreener Homepage  >  Equities  >  Nyse  >  The Home Depot, Inc.    HD

THE HOME DEPOT, INC.

(HD)
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Home Depot to Buy Former Unit HD Supply for $8.7 Billion

11/16/2020 | 11:52am EST

By Colin Kellaher

Home Depot Inc. agreed to buy HD Supply Holdings Inc. for about $8.7 billion, beefing up its ability to distribute industrial products amid the pandemic and reuniting with a unit it sold off in 2007.

HD Supply is a wholesale distributor of electrical, plumbing, janitorial and other supplies. It has about 44 distribution centers in the U.S. and Canada. It booked sales of nearly $6 billion in its latest fiscal year, though it recently sold off a construction unit that accounted for about half its business.

Home Depot, which has gotten a big lift in sales from rising interest in household projects amid the coronavirus pandemic, said it expects the acquisition of HD Supply will accelerate its sales growth and add to earnings starting next fiscal year.

The company in August reported its strongest quarterly sales growth in nearly 20 years and is expected to report another strong gain on Tuesday. The pandemic has fueled do-it-yourself projects and strained supply chains. CEO Craig Menear had sought to build up the company's professional business before coronavirus.

The Atlanta home-improvement giant said it will pay $56 a share in cash for HD Supply, a 25% premium to Friday's closing price of $44.81. Based on roughly 155.6 million shares outstanding, Home Depot is paying about $8.7 billion.

Home Depot said it will fund the acquisition, which it expects to complete by the end of January, with cash on hand and debt. The transaction has a total enterprise value of roughly $8 billion, including HD Supply's net cash, Home Depot said.

Home Depot built HD Supply in the 2000s through an acquisition spree led by Robert Nardelli, a former chief executive. After a CEO change, the company sold the unit in 2007 to Bain Capital, Carlyle Group and Clayton Dubilier Rice in a leveraged buyout worth $8.4 billion.

The trio of private-equity firms took HD Supply public in 2013.

It competes with Fastenal Co., W.W. Grainger Inc. and Home Depot's own Pro division.

HD Supply last year said it planned to separate its facilities-maintenance and its construction and industrial businesses into two publicly traded companies, but it put those plans on hold in March amid chaotic market conditions brought on by the pandemic.

HD Supply in August opted to sell the construction and industrial business, known as White Cap, to Clayton Dubilier for $2.9 billion in cash and to focus on the facilities-maintenance business. That deal closed last month.

Shares of HD Supply jumped 24.2% to $55.77 in early trading Monday. Home Depot shares edged up less than 1%.

Write to Colin Kellaher at colin.kellaher@wsj.com

(END) Dow Jones Newswires

11-16-20 1151ET

Stocks mentioned in the article
ChangeLast1st jan.
FASTENAL COMPANY 0.45% 47.82 Delayed Quote.-2.07%
HD SUPPLY HOLDINGS, INC. 0.21% 55.99 End-of-day quote.0.00%
THE CARLYLE GROUP INC. -2.84% 31.49 Delayed Quote.0.16%
THE HOME DEPOT, INC. -3.03% 274.05 Delayed Quote.3.17%
W.W. GRAINGER,INC. -1.65% 370.46 Delayed Quote.-7.75%
ZR (ZR) - CBE (ELECTRONIC)/C1 1.32% 13.48 End-of-day quote.7.06%
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Financials (USD)
Sales 2021 130 B - -
Net income 2021 12 753 M - -
Net Debt 2021 27 357 M - -
P/E ratio 2021 23,2x
Yield 2021 2,20%
Capitalization 295 B 295 B -
EV / Sales 2021 2,48x
EV / Sales 2022 2,48x
Nbr of Employees 415 700
Free-Float 60,1%
Chart THE HOME DEPOT, INC.
Duration : Period :
The Home Depot, Inc. Technical Analysis Chart | MarketScreener
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Technical analysis trends THE HOME DEPOT, INC.
Short TermMid-TermLong Term
TrendsNeutralNeutralBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 33
Average target price 307,07 $
Last Close Price 274,05 $
Spread / Highest target 29,5%
Spread / Average Target 12,1%
Spread / Lowest Target -23,4%
EPS Revisions
Managers and Directors
NameTitle
Craig A. Menear Chairman & Chief Executive Officer
Edward P. Decker President & Chief Operating Officer
Richard V. McPhail Chief Financial Officer & Executive Vice President
Matthew A. Carey Chief Information Officer & Executive VP
Paul Antony Senior Vice President-Technology
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