Posted on 08/26/2007 8:01:50 PM PDT by DeaconBenjamin
Home Depot was forced to drop the sale price of its commercial supply business by nearly $2 billion yesterday, according to people involved in the negotiations, one of the first big buyouts to be renegotiated as a result of recent tightening of the credit markets and problems in the housing market.
The renegotiated deal, which cut the sale price roughly 18 percent, to $8.5 billion, could lead to reconsideration of some other large buyouts that are still pending and are worth nearly $400 billion collectively. Such turmoil is likely to leave the Wall Street banks that backed those deals stuck with billions of dollars in loans that cannot be resold.
In cutting the price tag of the deal so dramatically, Home Depot may have created a template for other buyout firms to drag sellers back to the negotiating table. It could also bring an end to the two-year buyout boom, which was fueled by cheap credit.
More broadly, the modified deal will be a test for the stock and bond markets, which calmed a bit last week after two weeks of decline and uncertainty. Takeovers by private equity firms had helped fuel the stock market’s rise in the last few years, and investors have been watching this deal closely for signs of how the credit squeeze might affect deal-making and the prospects for the overall economy.
Home Depot’s board approved the deal in principle during a meeting yesterday afternoon, people involved in the negotiations said, and the company plans to announce the transaction today.
Wall Street has been abuzz in recent weeks about what the market turmoil might mean for other large deals that are supposed to be completed in the next two months, including the $45 billion buyout of the Texas energy company TXU.
(Excerpt) Read more at nytimes.com ...
they where probably just happy the check cleared
LOL.
But W still says there is plenty of liquidity.
2 Billion less than book. Market value is a hard reality for Wall Street.
So it’s Bush’s fault?
"The Aug. 20 letters from the Fed to Citigroup and Bank of America state that the Fed, which regulates large parts of the U.S. financial system, has agreed to exempt both banks from rules that effectively limit the amount of lending that their federally-insured banks can do with their brokerage affiliates."
"Citigroup, Bank of America, JPMorgan Chase and Wachovia, each of whom borrowed $500 million."
Yes, I do.
They are still way ahead of Daimler-Benz selling Chrysler for 25 billion less than they paid for it.
"calmed a bit" = up 300 points.
If housing cools off, HD sells less stuff. It is that simple.
Too bad for HD, but GM and others, learned a long time ago that selling typewriters or electric generators was not their core business and they lost money too. Every time you see someone take on a business that does not fit their model you can start writing the news story about it's collapse.
I thought deflation was evil.
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