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potential $100 billion leveraged buyout

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URL: https://www.kleenkuip.com/forum/forum_posts.asp?TID=3230
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Topic: potential $100 billion leveraged buyout

Posted By: dennis_is_ok
Subject: potential $100 billion leveraged buyout
Date Posted: 04/December/2006 at 11:17pm

NEW YORK � Shares of Home Depot Inc. may give back gains on Monday, after the home improvement retail giant said it hasn't had any talks regarding a private-equity takeover.

On Friday, rumors swirled of a potential $100 billion leveraged buyout, sending the stock up nearly 3 percent to close at $38.97 on the NYSE. But after the market close, Home Depot said in a regulatory filing it hasn't had any discussions about selling the company, and the company's board said it "unanimously supports the management team."

In a note to clients, Morgan Stanley analyst Gregory Melich said he doesn't believe Home Depot is worth chasing at $39 on buyout speculation. Goldman Sachs' Matthew Fassler agrees, noting that while the economics of a deal work, the company _ with healthy margins and a need to reinvest in its stores _ is not an optimal candidate.

Fassler also thinks size may be a barrier to any deal, saying a Home Depot buyout would be the largest in history, thereby testing the appetite of the fixed income markets.