The new owners of Home Depot’s supply chain business (HD Supply) said in June that it is premature to say whether they will divest any of the $12-billion distributor’s assets after taking full ownership, said David Novak, a partner at Clayton Dubilier & Rice, one of the three private equity firms that have agreed to buy the unit from The Home Depot Inc. for $10.3 billion, according to a report inModern Distribution Management.
Bain Capital LLC, Carlyle Group and CD&R are splitting the investment evenly, according toMDM.
The new owners do plan to continue building the company through acquisitions. “That we will certainly do,” Novak toldMDM.
According toMDM’sreport, this follows CD&R’s growth strategy with other distributors it has invested in, including the $12-billion electrical distributor Rexel, which has made 15 acquisitions since CD&R (with a team of firms) invested in it, and WESCO International Inc., which acquired more than $500 million in annualized sales over four years of CD&R investment.
Joe DeAngelo and other key members of management will be staying with HD Supply, Novak toldMDM. There are no immediate plans to change HD Supply’s name.
Well-run distributors continue to be an attractive investment opportunity for private equity because the risk is spread over a number of customers, product lines and manufacturers, according to Novak.
The purchase of HD Supply is a “great example of how private equity can help businesses like these make needed changes to go to the next level of profitable growth,” Novak toldMDM.
HD Supply’s new owners plan to make the distributor a long-term investment. “With distribution, you can’t make changes overnight,” Novak said.
New owners: HD Supply to stay the course
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