More than a dozen attorneys from Atlanta, New York and Wilmington, Del., were involved in hammering out a settlement between Home Depot Inc. and HD Supply Inc. over how much the home-improvement retailer would pay to its former subsidiary.
HD Supply split its legal work between Atlanta firm Rogers & Hardin and the New York-based giant firm Skadden, Arps, Slate, Meagher & Flom, according to a document in Delaware Chancery Court. Home Depot divvied up its assignments between the Delaware firm Morris, Nichols, Arsht & Tunnell and New York-based lawyers from Quinn Emanuel Urquhart Oliver & Hedges.
Per the terms of the settlement, Home Depot will pay HD Supply $22 million in cash, along with other non-cash considerations, according to a Feb. 2 news release. In the companies’ original Aug. 2007 merger agreement, Home Depot sold its HD Supply unit to a group of private equity funds for $8.5 billion. That price, however, was subject to adjustments after the deal closed, based on HD Supply’s working capital.
However, once Home Depot and the three private equity funds that bought HD Supply tried to work out the post-closing purchase price adjustment, they couldn’t come to an agreement. HD Supply’s new owners ended up suing Home Depot in Delaware Chancery Court in Aug. 2008. HD Supply’s primary argument was that purchase-price adjustment issues that Home Depot wanted submitted to an arbitrator were instead contractual issues and not subject to arbitration. Home Depot filed a motion to throw out HD Supply’s suit and submit the issues to the arbitrator, Ernst & Young.
In October, Delaware Chancery Court Chancellor William B. Chandler III ruled in favor of HD Supply, saying the case could proceed. Home Depot and HD Supply then began the discovery process; the $22 million settlement was reached during discovery and before the matter went to trial.
Rogers & Hardin corporate partner Alan Leet, litigation partner Dan Laney [photo, right] and associate Leah Epstein, all in Atlanta, were co-counsel to HD Supply on the settlement. They worked with HD Supply general counsel Ricardo Nuñez, who is based in Orlando.
Skadden partners Paul Lockwood in Wilmington and Jay Kasner, Christopher Malloy and Scott Musoff in New York were also co-counsel to HD Supply.
Morris, Nichols, Arsht & Tunnell partner Martin Tully and associate Kevin Coen in Wilmington, and Quinn Emanuel partners Steve Neuwirth, Kevin Reed and Deborah Brown [photo, right] in New York advised Home Depot.
Terms of the settlement were not made public; Leet and Laney declined to comment.
HD Supply, headquartered in Atlanta and Orlando, distributes building materials and maintenance and industrial supplies to professional contractors. HD Supply was created in 1997 and was greatly expanded by former Home Depot CEO Bob Nardelli through multiple acquisitions.
Three private-equity funds, Bain Capital, The Carlyle Group and Clayton, Dubilier & Rice, own a majority stake in HD Supply, while Home Depot retains a 12 percent stake in its former subsidiary. Home Depot said in a news release that it will take a pre-tax charge of $163 million for a write-down of its investment in HD Supply, according to Home Depot. The charge “reflects a lower valuation for its investment in HD Supply,” Home Depot said.