CNBC Faber Report: Behind Home Depot Rumors
Shares of Home Depot have been trading lower after the second largest U.S. retailer reiterated that no talks have taken place involving a leveraged buyout. Deal rumors boosted share price nearly 3% on Friday. On “Squawk on the Street,” CNBC's David Faber revealed what’s going on with Home Depot .
According to Faber -- on the face of it--a leveraged buy-out seems impossible. And everyone Faber has talked with--either in management, close to management, the board of directors or on the private equity side say--it’s not going to happen.
Faber says the whole idea would be ludicrous were it not for the fact that Home Depot owns a lot of its stores - and there would be the ability to finance a lot of the debt in the real estate financing market. That’s a key distinction here.
As Faber has pointed out in the past- there’s only so much appetite in the high yield market for a huge deal. However, if you can move it to another market, then, at least you can say although it’s not likely--at least it's possible.