By Associated Press Writer
updated 8/28/2007 3:13:39 PM ET 2007-08-28T19:13:39

The Home Depot Inc. said Tuesday it has agreed to sell its wholesale distribution business to a private equity group for $8.5 billion — about $1.8 billion less than originally agreed.

The announcement comes after several days of intense negotiations to preserve the deal at the lower price.

The sale price as announced in June was $10.3 billion. But turbulent credit conditions and a tightening housing market forced the talks on new terms.

As part of the amended terms, Home Depot will purchase a 12.5 percent equity interest in the whole business for $325 million and will guarantee a $1 billion senior secured loan of HD Supply, a business that was designed to serve contractors.

The sale is scheduled to take place on Thursday.

"Despite the softness in the financing and residential construction markets, the terms of the HD Supply sale deliver shareholder value today and in the future as we will share in HD Supply's upside potential," said Frank Blake, chairman and CEO of Home Depot, the world's biggest home improvement store chain.

"We are now focused on our retail business," he said.

Home Depot shares rose 38 cents to $35.40 in premarket trading.

The buyers include affiliates of Bain Capital Partners, the Carlyle Group and Clayton, Dubilier & Rice.

Home Depot said it expects to net approximately $7.9 billion in cash proceeds from the sale.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 4.73%
$30K home equity loan FICO 5.26%
$75K home equity loan FICO 4.70%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.42%
13.42%
Cash Back Cards 17.94%
17.94%
Rewards Cards 17.14%
17.14%
Source: Bankrate.com