June 15 (Bloomberg) -- Home Depot Inc., the world's largest home-improvement retailer, will receive separate offers of about $10 billion for its contractor-supplies unit from two private- equity groups, people familiar with the negotiations said.

Bain Capital LLC, Carlyle Group and Clayton Dubilier & Rice Inc. make up one group, and the other includes Thomas H. Lee Partners LP and CCMP Capital Advisors LLC, said the people, who declined to be identified because an agreement hasn't been reached. Final bids are due today, they said.

Chief Executive Officer Frank Blake is reversing predecessor Robert Nardelli's plans to expand the unit, which sells lumber and tools to contractors, to focus on retail stores as Lowe's Cos. cuts into sales.

``It's a sign they see more opportunities in retail,'' said Sarah Henry, a Berwyn, Pennsylvania-based analyst with MFC Global Investment Management.

Selling the unit would show that Blake, who took over in January, ``sees ways to invigorate that part of the business,'' said Henry, who helps oversee $370 billion of assets, including Home Depot shares.

The company may reach an agreement as early as next week, the people said.

Shares of Home Depot rose 16 cents to $37.95 at 4:21 p.m. in New York Stock Exchange composite trading. The stock, down 5.5 percent this year, is the worst performer in the Dow Jones Industrial Average.

Unhappy Investors

Paula Drake, a spokeswoman for the Atlanta-based retailer, declined to comment. Representatives for Bain, Carlyle, Clayton Dubilier, Thomas H. Lee Partners, and CCMP also wouldn't comment.

Home Depot told investors in February it would consider shedding the unit. Nardelli wanted the division to generate 20 percent of Home Depot's revenue, up from 13 percent now. The strategy was criticized by investors.

The company ousted Nardelli in January after the former General Electric Co. executive's pay package, abrasive style and aggressive acquisition strategy alienated investors. Ralph Whitworth, an activist shareholder, called Nardelli's HD Supply expansion ``strategic adventurism'' and urged Home Depot to sell or spin off the division.

Blake has sought to repair Home Depot's relationships with Wall Street. His February announcement on HD Supply lifted the company's shares to a 10-month high. In May, when Blake apologized for Nardelli's decision to keep Home Depot's 2006 annual meeting to 45 minutes and limit shareholders' chances to comment, investors applauded.

Credit Risk

HD Supply had sales of $12.1 billion last year. Home Depot paid as much as $8 billion to acquire the 38 companies that make up the unit, David Schick, an analyst with Stifel Nicolaus & Co., wrote in a February research note.

Credit-default swaps based on $10 million of the company's bonds fell $1,000 to $18,500, according to composite prices from CMA Datavision. They have dropped $17,750 from $36,250 since Jan. 5. Credit-default swaps are based on corporate bonds and are used to speculate on a company's ability to repay debt. A decrease indicates an improving perception in credit quality.

Buyout funds typically target retailers for their predictable cash flows and property assets. Firms have announced $930 billion of takeovers worldwide in the past 12 months, more than double the $394 billion of deals unveiled the previous year, according to data compiled by Bloomberg.

Clayton Dubilier, based in New York, specializes in buying complicated businesses that often include retail or service components. Founded in 1978, the firm recently agreed to buy ServiceMaster Co., a home-services company whose brands include ChemLawn, Merry Maids and Terminix.

Clear Channel

Clayton Dubilier joined with Washington-based Carlyle to buy Ford Motor Co.'s Hertz rental car unit in December 2005; the firms sold Hertz shares to the public less than a year later. Boston-based Bain, the third member of the group, has this year purchased companies including OSI Restaurant Partners Inc., the operator of Outback Steakhouse, and is set to acquire Clear Channel Communications Inc.

Thomas H. Lee Partners, a member of the competing bidding group, is Bain's partner in the Clear Channel takeover, which ran into shareholder opposition from investors including Highfields Capital Management and Fidelity Investments.

Boston-based Lee, founded in 1974, also participated with Carlyle and Bain in the purchase of Dunkin' Brands Inc., which franchises Dunkin' Donuts stores. CCMP is the former buyout arm of JPMorgan Chase & Co.

To contact the reporter on this story: Justin Baer in New York at jbaer1@bloomberg.net; Jason Kelly in New York at jkelly14@bloomberg.net.

Last Updated: June 15, 2007 16:51 EDT