September 10, 2007 / 1:57 PM / 12 years ago

Home Depot revises 2007 outlook after buyback

(Recasts first paragraph; adds share price, supply unit sale details)

NEW YORK, Sept 10 (Reuters) - Home Depot Inc (HD.N) raised its fiscal-year earnings forecast slightly on Monday after the home-improvement retailer agreed to buy back 289.3 million shares of its common stock for $10.7 billion.

The buyback values each share at $37, above the current trading price, but at the low end of the company’s tender offer for the stock.

The repurchase represents 14.6 percent of the company’s outstanding shares on Aug. 31, the day the tender offer expired.

Home Depot said it expected earnings per share from continuing operations to decline by 7 percent to 9 percent in the current fiscal year. It had previously forecast a decrease of 12 percent and 15 percent, excluding the benefit of any share repurchases.

Home Depot shares were up 17 cents at $34.38 in morning New York Stock Exchange trade.

In August, the Atlanta-based company said it would sell its wholesale supply business to buyout firms Bain Capital Partners, Carlyle Group [CYL.UL] and Clayton, Dubilier & Rice for $8.5 billion — nearly 18 percent less than previously agreed upon — as the U.S. housing slump and recent credit crunch forced renegotiation of the deal.

Home Depot had said earlier that it would use proceeds from the sale of the supply unit, existing cash and new debt to fund a whopping $22.5 billion share buyback. The tender offer for $37 to $42 per share was part of that planned repurchase.

(See here -- Reuters' retail and consumer blog)

(Additional reporting by Karen Jacobs)

(Reporting by Aarthi Sivaraman)

((Editing by Gerald E. McCormick and Lisa Von Ahn; Reuters e-mail: aarthi.sivaraman@reuters.com; +1 646 223 6191))

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