Home Depot, buyers delay closing of unit sale

ATLANTA (Reuters) - Retailer Home Depot Inc. (HD.N) said on Wednesday that it and the private equity firms that have agreed to buy its Home Depot Supply unit have delayed the proposed closing date of the deal to August 23 from August 16.

The company's shares rose as much as 2 percent in morning trading.

Last week, the home improvement retailer said that it was in discussions with the buyers -- Bain Capital Partners, Carlyle Group CYL.UL and Clayton, Dubilier & Rice -- about restructuring the agreement for the unit, which provides materials to home builders and other contractors.

The private equity firms had agreed to pay $10.3 billion for the wholesale supply business, but Home Depot said that price might be reduced.

Home Depot last week also cut the price of a July tender offer to buy back 250 million shares to a range of $37 to $42 a share, from the previous $39 to $44, citing market conditions.

The sale of the supply unit and "Dutch auction" tender offer were part of a bigger plan Home Depot announced in June to repurchase $22.5 billion in stock.

But the prospect of the supply sale faltering has raised concern among some investors over the fate of the tender offer.

"If the deal doesn't go through, they'll probably modify the terms of the tender offer once again," said Giri Cherukuri, head trader at OakBrook Investments, which owns 600,000 shares of Home Depot.

"So we'll wait and see and hopefully it will get resolved by next week," he added.

Home Depot shares were up 37 cents, or 1.1 percent, to $33.98 in morning trading on the New York Stock Exchange. So far this year, the stock has fallen 15 percent.

(Reporting by Karen Jacobs and Caroline Humer)