Price may change for HD Supply
Home Depot is in discussions with three private equity groups over the sale of its HD Supply division “in view of current financial market conditions,” the retailer announced. Changes to the terms and financing could result, including a lowering of the $10.3 billion purchase price.
The company also said it will change the terms of its share repurchase plan, lowering its tender offer from a range of $39 to $44 per share to $37 to $42. The expiration date has been extended to Aug. 31.
Home Depot first announced its $22.5 billion stock buyback and recapitalization plan in June, along with the agreement to sell its pro-oriented HD Supply division to a consortium of three investment firms, Bain Capital Partners, Carlyle Group and Clayton, Dubilier & Rice.
In other news, Home Depot reported second-quarter financial results, showing net earnings fell 15 percent to $1.59 billion from $1.86 billion a year ago. Sales fell slightly, down 1.8 percent to $22.2 billion from $22.6 billion last year.
CEO Frank Blake said the company performed in line with financial expectations, despite a challenging housing market and competitive selling environment. In a statement, Blake expressed some pessimism on selling conditions in the coming year, but added the company is attempting to find valuable investment opportunities to drive growth in a down market.
“We believe the housing and home improvement markets will remain soft into 2008. We will continue to invest thoughtfully for the long-term health of the business,” Blake said.
Earnings in the company’s HD Supply unit were lower in light of a hefty tax charge. Earnings fell 59 percent to $66 million from $161 million last year at HD Supply, including a tax charge of $60 million related to the disposition of the division. Home Depot now is listing HD Supply as a discontinued operation.
Toll Brothers’ revenues down in third quarter
Horsham, Pa.-based Toll Brothers, the largest U.S. builder of luxury homes, today reported a 21 percent decline in third-quarter revenue and said that mortgage market troubles may delay a recovery in the weak housing market.
Revenue came in at $1.21 billion for the quarter ended July 31, according to preliminary results, compared to $1.53 billion for the same period last year.
Backlog declined 34 percent to approximately $3.67 billion, while signed contracts dropped 31 percent to about $727.1 million. In addition, third-quarter cancellations increased 24 percent, from 19 percent the previous quarter.
“Hesitant customers remain on the sidelines, unsure of whether home prices have bottomed,” CEO Robert Toll said in a statement. “The pace of home sales could slow further until the credit markets settle down.”
Wolseley makes two more acquisitions
Wolseley, the United Kingdom-based parent of Stock Building Supply and Ferguson, has announced two recent acquisitions in North America and Europe.
The company’s Ferguson division acquired Fire Fab, a distributor and fabricator of fire safety and suppression systems. Fire Fab, based in Minneapolis, had revenue of $12.4 million last year.
“This acquisition expands Ferguson’s presence in the growing fire protection market,” the company said in a statement.
Additionally, Wolseley’s Nordic region subsidiary, DT Group, acquired Sweden-based Save Tra Forsaljnings, a builders’ merchant with two branches in Sweden. The company had revenue of $16.5 million last year.
“This is the eighth bolt-on acquisition since DT Group joined Wolseley Group and is consistent with the plan to expand DT’s heavy side building materials footprint in the Nordic region,” the company noted.