Banks Might Derail Home Depot Deal

Private equity threatens lawsuit as financing dries up
By Jason Farago,  Newser Staff
Posted Aug 24, 2007 7:10 AM CDT
Adventures at Home Depot   ((c) billypalooza)
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(Newser) – The pending sale of part of Home Depot took an ugly turn last night as three banks and three private equity firms entered into a showdown over financing. Home Depot dropped its asking price by over $1 billion, but the banks involved—JPMorgan Chase, Lehman Brothers and Merrill Lynch—have threatened to withdraw from a deal that may become the  first casualty of the credit crunch.

In years past banks have happily funded-private equity buyouts at handsome terms, but the current crisis has left them with a $300-billion backlog in deals to be funded. Even after Home Depot's price drop the banks remain reluctant, and Bain Capital, Carlyle Group and CD&R, the three private equity firms at the table, have threatened a lawsuit.