Home Depot news upsets stock

Home Depot Inc. sent its already battered shares down further Thursday when it issued a double dose of bad news that it might get less than expected for its wholesale distribution unit and that it was lowering how much it would pay to buy back a portion of its stock.

Although the world’s largest home-improvement store chain said it was committed to getting the most value from the sale of its HD Supply unit and completing its plan to repurchase as much as $22.5 billion in company stock, analysts warned there could be more bumps along the way.

The retailer’s shares tumbled $2.01, or 5.3%, to $35.79.

“With Home Depot being such a bellwether stock, restructuring the Supply financing sends a very negative message to the rest of the market,” Deutsche Bank Securities Inc. analyst Mike Baker wrote in a research note.

Home Depot has said it would fund the share-repurchase plan in part with the proceeds from the sale of the unit.

The Atlanta-based company said it might change the terms and financing of its agreement for the sale of its HD Supply unit, which it said could result in a drop in the $10.3-billion sale price.

Home Depot said it was now in talks with affiliates of Bain Capital Partners, Carlyle Group and Clayton, Dubilier & Rice to change the agreement to sell HD Supply, which serves contractors and other business customers.

The company also said it would lower the price of its modified tender offer to $37 to $42 a share, from $39 to $44. In July, Home Depot announced the tender offer to buy back as many as 250 million shares, but its stock price has fallen since.