Acquisition to Accelerate Sales Growth; Expected to be
Accretive to Earnings Per Share in 2021
ATLANTA, Nov. 16, 2020 /CNW/ -- The Home
Depot®, the world's largest home improvement retailer,
today announced it has entered into a definitive agreement to
acquire HD Supply Holdings, Inc., a leading national distributor of
maintenance, repair and operations (MRO) products in the
multifamily and hospitality end markets. The acquisition is
expected to position The Home Depot as a premier provider in the
MRO marketplace.
"The MRO customer is highly valued by The Home Depot, and this
acquisition will position the company to accelerate sales growth by
better serving both existing and new customers in a highly
fragmented $55 billion marketplace,"
said Craig Menear, chairman and CEO
of The Home Depot. "HD Supply complements our existing MRO business
with a robust product offering and value-added service
capabilities, an experienced salesforce that enhances the strong
team we have in place, as well as an extensive, MRO-specific
distribution network throughout the U.S. and Canada."
"We're thrilled that our associates are joining the Home Depot
team and that our customers will be able to benefit from a broader
product assortment, expanded delivery options and enhanced services
nationally," said Joe DeAngelo,
chairman and CEO, HD Supply. "We are confident that this will
position both The Home Depot and HD Supply for continued growth and
success in the MRO distribution space."
Under the terms of the merger agreement, a subsidiary of The
Home Depot will commence a cash tender offer to purchase all
outstanding shares of HD Supply common stock for $56 per share, for a total enterprise value
(including net cash) of approximately $8
billion. The closing of the tender offer is subject to
customary closing conditions, including regulatory approvals and
the tender of a majority of the shares of HD Supply common stock
then outstanding (on a fully diluted basis) and is expected to be
completed during The Home Depot's fiscal fourth quarter, which ends
on January 31, 2021. The transaction
is expected to be funded through cash on hand and debt.
"We plan to access the debt capital markets to raise incremental
indebtedness in support of this acquisition. We also expect the
transaction to be accretive to earnings in fiscal 2021, with
potential for significant shareholder value creation over the
longer term," said Richard McPhail,
executive vice president and CFO.
The Company will hold its third quarter 2020 earnings conference
call on Tuesday, November 17, at
9 a.m. ET.
Advisors
J.P. Morgan Securities LLC served as
exclusive financial advisor, and Wachtell, Lipton, Rosen & Katz served as legal
counsel to The Home Depot in connection with the transaction.
About The Home Depot
The Home Depot is the world's
largest home improvement specialty retailer, with 2,295 retail
stores in all 50 states, the District of Columbia, Puerto
Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces
and Mexico. In fiscal 2019, The Home Depot had sales
of $110.2 billion and earnings of $11.2 billion. The
Company employs more than 400,000 associates. The Home Depot's
stock is traded on the New York Stock Exchange (NYSE: HD) and is
included in the Dow Jones industrial average and Standard &
Poor's 500 index.
About HD Supply
HD Supply (NASDAQ: HDS) is one of the
largest wholesale distributors in North
America. The company provides a broad range of products and
value-add services to approximately 300,000 customers with
leadership positions in the living space maintenance, repair and
operations sector. Through approximately 44 distribution centers,
across 25 states and two Canadian provinces, the company's
approximately 5,500 associates provide localized, customer-tailored
products, services and expertise. For more information, visit
www.hdsupply.com.
Certain statements contained herein constitute
"forward-looking statements" as defined in the federal securities
laws. Forward-looking statements may relate to, among other things,
the proposed acquisition of HD Supply that involves substantial
risks and uncertainties that could cause actual results to differ
materially from those expressed or implied by such statements (the
"potential acquisition"); statements about the potential benefits
of the potential acquisition; HD Supply's plans, objectives,
expectations and intentions; the anticipated timing of closing of
the potential acquisition (including failure to obtain necessary
regulatory approvals) in the anticipated timeframe or at all,
including uncertainties as to how many of HD Supply's stockholders
will tender their shares in the tender offer and the possibility
that the potential acquisition does not close; risks related to the
ability to realize the anticipated benefits of the potential
acquisition, including the possibility that the expected benefits
from the proposed transaction will not be realized or will not be
realized within the expected time period; the risk that the
businesses will not be integrated successfully; disruption from the
potential acquisition making it more difficult to maintain business
and operational relationships; negative effects of this
announcement or the consummation of the potential acquisition on
the market price of our or HD Supply's common stock, credit ratings
or operating results; significant costs associated with the
potential acquisition; unknown liabilities; the risk of litigation
and/or regulatory actions related to the potential acquisition; the
impact on our business, operations and financial results of the
COVID-19 pandemic (which, among other things, may affect many of
the items listed below); the demand for our products and services;
net sales growth; comparable sales; effects of competition;
implementation of store, interconnected retail, supply chain and
technology initiatives; inventory and in-stock positions; state of
the economy; state of the housing and home improvement markets;
state of the credit markets, including mortgages, home equity loans
and consumer credit; impact of tariffs; issues related to the
payment methods we accept; demand for credit offerings; management
of relationships with our associates, suppliers and vendors;
international trade disputes, natural disasters, public health
issues (including pandemics and related quarantines,
shelter-in-place and other governmental orders, and similar
restrictions), and other business interruptions that could
disrupt supply or delivery of, or demand for, the Company's
products or services; continuation of share repurchase programs;
net earnings performance; earnings per share; dividend targets;
capital allocation and expenditures; liquidity; return on invested
capital; expense leverage; stock-based compensation expense;
commodity price inflation and deflation; the ability to issue debt
on terms and at rates acceptable to us; the impact and expected
outcome of investigations, inquiries, claims and litigation; the
effect of accounting charges; the effect of adopting certain
accounting standards; the impact of regulatory changes; store
openings and closures; guidance for fiscal 2020 and beyond;
financial outlook; and the integration of acquired companies into
our organization and the ability to recognize the anticipated
synergies and benefits of those acquisitions. Forward-looking
statements are based on currently available information and our
current assumptions, expectations and projections about future
events. You should not rely on our forward-looking statements.
These statements are not guarantees of future performance and are
subject to future events, risks and uncertainties – many of which
are beyond our control, dependent on the actions of third parties,
or are currently unknown to us – as well as potentially inaccurate
assumptions that could cause actual results to differ materially
from our expectations and projections. These risks and
uncertainties include, but are not limited to, those described in
Item 1A, "Risk Factors," and elsewhere in our Annual Report on Form
10-K for our fiscal year ended February 2,
2020 and our Quarterly Report on Form 10-Q for the fiscal
quarter ended August 2, 2020.
Forward-looking statements speak only as of the date they are
made, and we do not undertake to update these statements other than
as required by law. You are advised, however, to review any further
disclosures we make on related subjects in our periodic filings
with the Securities and Exchange Commission.
Additional Information and Where to Find It
The tender offer referenced in this press release has not yet
commenced. This press release is for informational purposes only
and is neither an offer to purchase nor a solicitation of an offer
to sell securities, nor is it a substitute for the tender offer
materials that The Home Depot and its acquisition subsidiary will
file with the SEC. The solicitation and offer to buy HD Supply
stock will only be made pursuant to an Offer to Purchase and
related tender offer materials. At the time the tender offer is
commenced, The Home Depot and its acquisition subsidiary will file
a tender offer statement on Schedule TO and thereafter HD Supply
will file a Solicitation/Recommendation Statement on Schedule 14D-9
with the SEC with respect to the tender offer.
THE TENDER OFFER MATERIALS (INCLUDING AN OFFER TO PURCHASE, A
RELATED LETTER OF TRANSMITTAL AND CERTAIN OTHER TENDER OFFER
DOCUMENTS) AND THE SOLICITATION/RECOMMENDATION STATEMENT ON
SCHEDULE 14D-9 WILL CONTAIN IMPORTANT INFORMATION. HD SUPPLY
STOCKHOLDERS ARE URGED TO READ THESE DOCUMENTS CAREFULLY WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
THAT HOLDERS OF HD SUPPLY SECURITIES SHOULD CONSIDER BEFORE MAKING
ANY DECISION REGARDING TENDERING THEIR SECURITIES. The Offer to
Purchase, the related Letter of Transmittal and certain other
tender offer documents, as well as the Solicitation/Recommendation
Statement, will be made available to all holders of HD Supply stock
at no expense to them. The tender offer materials and the
Solicitation/Recommendation Statement will be made available for
free at the SEC's website at www.sec.gov. Additional copies may be
obtained for free by contacting The Home Depot or HD Supply. Copies
of the documents filed with the SEC by HD Supply will be available
free of charge on HD Supply's internet website at
https://ir.hdsupply.com/investors or by contacting HD Supply's
Investor Relations Department at (770) 852-9100. Copies of the
documents filed with the SEC by The Home Depot will be available
free of charge on The Home Depot's internet website at
https://ir.homedepot.com/ or by contacting The Home Depot's
Investor Relations Department at (770) 384-2871.
In addition to the Offer to Purchase, the related Letter of
Transmittal and certain other tender offer documents, as well as
the Solicitation/Recommendation Statement, The Home Depot and HD
Supply each file annual, quarterly and current reports and other
information with the SEC. The Home Depot and HD Supply's filings
with the SEC are also available to the public from commercial
document-retrieval services and at the website maintained by the
SEC at http://www.sec.gov.
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SOURCE The Home Depot