In 2013 Home Depot sold HD Supply, a leading national distributor of maintenance, repair and operations (MRO) products, to private equity firms Bain Capital, The Carlyle Group, and Clayton, Dubilier & Rice. The sale was completed to raise funds for share repurchases, but now, Home Depot has announced it will buy back the company for $8 billion.
In recent years, Home Depot has reinvested relatively little capital back into its business. It has instead chosen to return capital to shareholders, especially through buybacks. HD Supply operates in what Home Depot CEO Craig Menear referred to as a “highly fragmented $55 billion marketplace.” As a result, this acquisition may offer Home Depot an opportunity to once again begin expanding aggressively and consolidating market share in a new line of business.
The deal is expected to close by the end of the fourth quarter and be accretive to earnings in 2021. Goldman Sachs advised HD Supply on the deal while JP Morgan Advised Home Depot.