Don't Expect Home Depot To Restructure Its Buyback Offer

Shares of Home Depot Inc. (HD) had been free-falling for the past couple of weeks until Monday, as the market reacts to general weakness, subprime concerns and the surprise restructuring of Expedia Inc.’s (EXPE) offer to purchase its common stock because of credit market conditions.

Concerns about where the remaining 85% of Home Depot shares would trade after its own tender could also be to blame, says Deborah Weinswig. The Citigroup analyst thinks this negative reaction is irrational. While raising the prospect of Home Depot restructuring its own tender offer, she thinks it is unlikely.

Ms. Weinswig points to comments from a member of Citigroup’s Risk Arbitrage Team, who says even if the shares fall 10%, a restructuring is highly unlikely since “it could discredit the company and portray management as having little confidence in the stock price.”

Home Depot’s tender offer expires on August 16.

Comments

[Al Rob:]

The tender offer will work out great if HD successfully calls the bottom on the housing industry decline and in its own stock... If we still have another leg down then they will look like fools.

2007 Jul 31 10:03 AM

[hkstrang:]

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2007 Jul 31 02:07 PM