By ANDREW ROSS SORKIN and MICHAEL J. de la MERCED
The New York Times

Home Depot was forced to drop the sale price of its commercial supply business by nearly $2 billion yesterday, according to people involved in the negotiations, one of the first big buyouts to be renegotiated as a result of recent tightening of the credit markets and problems in the housing market.

The renegotiated deal, which cut the sale price roughly 18 percent, to $8.5 billion, could lead to reconsideration of some other large buyouts that are still pending and are worth nearly $400 billion collectively. Such turmoil is likely to leave the Wall Street banks that backed those deals stuck with billions of dollars in loans that cannot be resold.

In cutting the price tag of the deal so dramatically, Home Depot may have created a template for other buyout firms to drag sellers back to the negotiating table. It could also bring an end to the two-year buyout boom, which was fueled by cheap credit.

More broadly, the modified deal will be a test for the stock and bond markets, which calmed a bit last week after two weeks of decline and uncertainty. Takeovers by private equity firms had helped fuel the stock market’s rise in the last few years, and investors have been watching this deal closely for signs of how the credit squeeze might affect deal-making and the prospects for the overall economy.

read more HERE