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.

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By JOHN MARKOFF
The New York Times

SAN FRANCISCO, Aug. 24 - A Chinese technology company has expressed interest in buying a maker of computer disk drives in the United States, raising concerns among American government officials about the risks to national security in transferring high technology to China.

William D. Watkins of Seagate Technology

The overture, which was disclosed by the chief executive of one of the two remaining drive makers in the United States, William D. Watkins of Seagate Technology, has resurrected the issues of economic competitiveness and national security raised three years ago when Lenovo, a Chinese computer maker, bought I.B.M.’s personal computer business.

Tensions have been increasing lately between the countries over China’s ambitions in developing its military abilities and advanced technologies for industrial and consumer uses.

Although disk drives do not fall under a list of export-controlled technologies, the attempted purchase of an American disk drive company would require a security review by the federal government, according to several government officials.

In recent years, modern disk drives, used to store vast quantities of digital information securely, have become complex computing systems, complete with hundreds of thousands of lines of software that are used to ensure the integrity of data and to offer data encryption.

That could raise the prospect of secret tampering with hardware or software to make it possible to pilfer information via computer networks, intelligence officials have warned.

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By Jack Shafer
from Slate Online

Having bagged his trophy, how long will it take Rupert to bugger it?

The story flows down the page like a Wall Street Journal feature: A passel of haughty heirs controls a major corporation that transmutes every business opportunity into disaster, driving the firm’s stock off the cliff. A takeover bid arrives but melodrama ensues as the heirs squabble-first over the bidder’s character (it’s bad) but ultimately over how much money will be thrown their way as the heirs settle for what they can get.

So goes Rupert and the Bancrofts, in which the family that controls Dow Jones & Co. delivers it to Rupert Murdoch’s own News Corp. family dynasty. For the rotten old bastard-and I mean that affectionately-the Bancroft episode is only one chapter in his multivolume history of double-down wheeling and dealing. But having won the prize, will Murdoch come to regret it as he has so many of his acquisitions and investments and discard it?

The last time Murdoch made a controversial purchase of a family-controlled operation was when he picked up the Los Angeles Dodgers in the late 1990s from the O’Malleys for $350 million. The team was supposed to be the basis of his big sports media thrust, but after a couple of years he dumped the team.

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