HD Supply (HDS) is exploring a sale of its Waterworks unit that could fetch more than $2 billion following interest from private equity firms, Reuters reports.
A deal would allow HDS to pay down some of its $4.1 billion debt as it positions its construction and facilities maintenance businesses to benefit from President Donald Trump's emphasis on infrastructure spending and tax reform, according to the report.
Waterworks is the largest U.S. provider of water and sewer products to contractors and municipalities. It distributes a complete line of water, sewer, fire protection, and storm drain products to serve both contractors and municipalities in public works and private construction.
In December, HDS reported net sales for the Waterworks unit increased $28 million in Q3, or 4.0 percent, to $733 million for Q3 as compared to $705 million for the third quarter of fiscal 2015.
Overall, the company also reported net sales of $2.0 billion for the quarter, an increase of $66 million, or 3.4 percent, as compared to the third quarter of fiscal 2015. HD Supply is No. 6 on Industrial Distribution's Big 50 List.
HDS provides a broad range of products and value-add services to approximately 500,000 customers in three specialized market sectors: Maintenance, Repair and Operations (MRO), Water Infrastructure and Construction and Industrial Construction-White Cap.
Based in Atlanta, GA, the company has approximately 550 locations across 48 states and six Canadian provinces, and 14,000 employees.
HDS has sold three businesses in the past two years. In October, 2015 HDS sold its Power Solutions business unit, a provider of a diverse product and services to the investor owned utility, public power, construction and industrial markets, to Anixter Inc. for $825 million.
And in January, 2015, Home Depot completed its previously announced acquisition of substantially all of the assets of HD Supply Hardware Solutions, formerly known as Crown Bolt, a supplier of fasteners and builders hardware to retailers in the U.S. Terms of the sale were not disclosed.
Last April, the company said it was selling its HD Supply Interior Solutions business unit, formerly known as Creative Touch Interiors, to Interior Specialists, Inc., a provider of interior design, design center management and installation services. The terms of the transaction were not released.
Four months ago activist hedge fund Jana Partners LLC disclosed an 8.1 percent stake in HD Supply and said it had held discussions with the company's management about possible strategic options. Last month, Jana reported it reduced its stake in HDS to 4.9 percent.
In December, dealReporter cited an unnamed source saying HD Supply was working with Goldman Sachs while exploring interest for a potential suitor.
