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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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From: Mike Johnston6/19/2007 6:49:34 PM
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This credit bubble is expanding at ever increasing pace.

Home Depot will borrow $12 billion for a stock buyback.

June 19 (Bloomberg) -- Home Depot Inc., the world's largest home-improvement retailer, agreed to sell its contractor- supplies unit to three buyout firms for $10.3 billion and may purchase a record $22.5 billion of its stock.

The buyback amounts to 30 percent of the company's outstanding shares. The sale to Bain Capital LLC, Carlyle Group and Clayton Dubilier & Rice may close before Oct. 28, Home Depot said today in a statement. The unit, which accounted for 13 percent of Home Depot's $91 billion in sales last year, sells tools and lumber to construction companies.

Chief Executive Officer Frank Blake, who took over in January, is reversing predecessor Robert Nardelli's plans to expand the unit. Blake's priority is improving Home Depot's retail stores, and buying back the most stock in Home Depot's history may help reverse two years of declining shares.

``That's putting your money where your mouth is,'' said Walter Todd, who helps manage $800 million at Greenwood Capital Associates LLC in South Carolina. ``It certainly helps in the short term.''

The company will finance the repurchases with proceeds of the sale, existing cash and $12 billion of bonds.


bloomberg.com
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