Is Home Depot Giving Away the Store?

Critics say powerful shareholders are pushing the sale of the HD Supply unit for all the wrong reasons

The really important question about the sale of Home Depot's construction supply business isn't the price, which Home Depot lowered 18% on Aug. 28, to $8.5 billion, after round-the-clock negotiations. The real issue is whether the unit should be sold at all. Some upset investors argue that by selling HD Supply, which serves contractors rather than do-it-yourselfers, Home Depot's new management is dumping its best hope for future growth simply to finance a stock buyback and exorcise the ghost of ex-Chief Executive Robert Nardelli, who masterminded the purchase. They say Home Depot (HD) is giving away a prize to a bunch of smart buyout firms that will extract huge profits from it over the long term.

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