It's a measure of just how far Home Depot
The Street's relief is understandable, since, as of late last week, word was that the deal was falling apart, as the bankers, JPMorgan Chase
If you're wondering why things turned out this way, look no further than the Home Depot board's palpable desperation. It's hard for me to imagine a more ham-fisted sales plan than that executed by the Home Depot Board. Shall we recap?
- Step one, finally toss out reprehensible CEO Bob Nardelli, ushering in a Stalinesque need to purge his works from memory.
- Step two, identify (years too late) Home Depot Supply as a distraction from the core business.
- Step three, make it widely known that you can't wait to unload this asset -- and do it just as housing begins to crash like a rock.
- Step four, announce an OMG-gigantic-bazillion-dollar share repurchase that could only be funded by completing the deal.
- Step five, negotiate price and terms with Bain Capital, Carlyle Group, et al.
Now, if you were sitting across the table from the Home Depot board, wouldn't you have held out for a better price? Given Home Depot's egregious flopsweat, I'm surprised that "magic beans" weren't offered.
Allow me to be blunt: Home Depot's board seems to be among the worst on Wall Street. These are, remember, the same yahoos who got shareholders (and I'm one of them) into this mess in the first place by rubber-stamping ex-CEO Nardelli's delusions of grandeur. Nardelli's empire-building, unfortunately, didn't extend to building an empire of fine customer service, with the result that Lowe's
Now, we see that the Home Depot board isn't even capable of cleaning up its own mess, at least not very well. According to The Journal's tally, Home Depot will be dumping the entire smear onto the private buyers for about the same price it paid to put it together. The lost time and money required to staple together, and now unstitch, this mess will, of course, be borne by shareholders. Lord knows how big that was.
As I look back, it becomes more and more clear that at Home Depot, hard-headed Nardelli was only a symptom of the problem. Home Depot's board has failed shareholders time and time again by conducting a short-sighted, entirely reactive business plan. There's little worth bragging about when you do the right thing only after you've exhausted every other possibility. Where's the vision and leadership? I don't see it. Hopefully, come proxy-time, other stakeholders will vote their shares accordingly. I'm for the "throw the bums out" slate.
At the time of publication, Seth Jayson, a Top 10 CAPS player, had shares of Home Depot, but no positions in any other company mentioned here. See his latest CAPS blog commentary here. View his stock holdings and Fool profile here. Fool rules are here.