Atlanta – Shares of the Home Depot Inc. rose almost 2 percent Monday as investors awaited word of a deal that the retailer was selling its wholesale distribution business for nearly $2 billion less than planned.
The reduced sale price of $8.5 billion for the Home Depot Supply division, which was confirmed Sunday by a person with direct knowledge of the situation, reflected turbulent credit conditions and a tightening housing market.
Analysts welcomed reports of a deal by the world’s largest home-improvement-store chain.
“Look, they’ve been trying to sell Supply for a while,” said UBS analyst Brian Nagel. “They’re selling it for less than initially expected, but it’s going to be a positive because it allows them to go ahead with the buyback plan and refocus on their core retail business.”
Deutsche Bank analyst Mike Baker echoed the sentiment in a research report, saying investors expected the price would drop but were pleased the sale would go forward. And a Bank of America report on the agreement concluded: “While less than originally planned, we believe a sale in this environment must be considered a positive.”
Home Depot declined Monday to comment on the deal.
Its shares rose 57 cents, or 1.6 percent, to $35.25 Monday.
The retailer, which operates 2,200 stores in four countries and reported more than $90.8 billion in sales last year, wants to refocus on retail sales. It also plans to buy back up to $22.5 billion in company shares.
