Home Depot Not The First Company To Show Interest In Buying Hughes Supply

Feb. 9, 2006
While Home Depot will soon be the proud new owner of Hughes Supply Inc., it was just one of several companies that were seriously interested in buying the company.

While Home Depot will soon be the proud new owner of Hughes Supply Inc., it was just one of several companies that were seriously interested in buying the company.

According to an SEC filing by Hughes, on July 18, 2005, Hughes Supply’s Chief Executive Officer Tom Morgan received an e-mail from a senior representative of an unidentified "internationally recognized financial sponsor" expressing "a strong interest" in acquiring the company. The financial sponsor was seeking additional information in order to make a formal acquisition proposal.

Home Depot announced Jan. 10 that it was buying Hughes Supply. But it was the e-mail from the unidentified financial sponsor that set the wheels in motion for Hughes Supply to form a special committee to consider what the company should do. By early August, Hughes had hired Lehman Brothers as its financial adviser.

By mid-August, Home Depot had contacted the company and asked to open discussions with senior Hughes’ management. On Sept. 22, Home Depot Chief Executive Officer Robert L. Nardelli met with Morgan and told him Home Depot wanted to buy Hughes.

The unidentified organization that initially contacted Morgan in July said it was interested in making an offer for Hughes in the range of $39 to $42 a share. A short time after that, Home Depot said its proposed acquisition offer would be valued at $37.50 to $40 a share.

Two other suitors also not identified in the SEC documents contacted Hughes. One proposed buying Hughes for $40 to $44 a share; the other offered about $41.59 a share.

Hughes said it eventually heard from 13 prospective acquirers. Home Depot on Jan. 6 sent a letter offering to buy the company for $44 a share. The unidentified company which first inquired about buying Hughes asked for more time to evaluate its offer.