Item 1.01 Entry into a Material Definitive Agreement.
On November 15, 2020, HD Supply Holdings, Inc.,
a Delaware corporation (the “Company”), entered into an Agreement and Plan of Merger (the “Merger Agreement”)
with The Home Depot, Inc., a Delaware corporation (“Parent”), and Coronado Acquisition Sub Inc., a Delaware corporation
and a wholly owned subsidiary of Parent (“Merger Sub”). Pursuant to the terms of the Merger Agreement, Parent has agreed
to cause Merger Sub to commence a tender offer (as it may be extended, amended or supplemented from time to time, the “Offer”)
to purchase any and all of the outstanding shares of common stock, par value $0.01 per share, of the Company (the “Shares”),
at a price of $56.00 per Share (the “Offer Price”), net to the holder thereof, in cash, without interest thereon.
Following the consummation of the Offer,
Merger Sub will merge with and into the Company (the “Merger”) in accordance with the Merger Agreement and Section 251(h) of
the General Corporation Law of the State of Delaware (the “DGCL”), and the Company will survive the Merger as a wholly
owned subsidiary of Parent. At the effective time of the Merger (the “Effective Time”), each Share that is not tendered
and accepted pursuant to the Offer (other than Shares owned by Parent, Merger Sub or the Company, or by any of their respective
direct or indirect wholly owned subsidiaries, and Shares held by stockholders of the Company who are entitled to demand and who
have properly and validly demanded their statutory rights of appraisal in compliance with Section 262 of the DGCL) will be
automatically converted into the right to receive the Offer Price, net to the holder thereof, in cash, without interest thereon.
The board of directors of the Company (the
“Company Board”) has approved the Merger Agreement and determined that the Offer, the Merger and the other transactions
contemplated by the Merger Agreement are advisable and fair to the stockholders of the Company and in the best interests of the
Company, and recommends that the stockholders of the Company accept the Offer and tender their Shares to Merger Sub pursuant to
the Offer.
The obligation of Merger Sub to purchase
Shares tendered in the Offer is subject to customary closing conditions, including, among other things, (i) that at the expiration
of the Offer a simple majority of all of the outstanding Shares (determined on a fully diluted basis, which assumes conversion
or exercise of all derivative securities regardless of the conversion or exercise price, the vesting schedule or other terms and
conditions thereof) be validly tendered and not withdrawn in accordance with the terms of the Offer (the “Minimum Condition”)
and (ii) the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the “HSR Act”). The Offer is not subject to any financing condition.
The Merger Agreement includes representations,
warranties and covenants of the parties customary for a transaction of this nature. Among them, the Company has agreed to conduct
its operations in the ordinary course during the period between the execution of the Merger Agreement and the Effective Time.
Pursuant to the “no-shop” provisions
in the Merger Agreement, the Company will become subject to customary “no-shop” restrictions on its and its representatives’
ability to solicit, discuss or negotiate alternative acquisition proposals from third parties, subject to exceptions for acquisition
proposals that the Company Board determines in good faith constitutes or could reasonably be expected to result in a “Superior
Proposal” (as defined in the Merger Agreement) (the “No-Shop Provisions”).
The Merger Agreement also includes customary
termination rights for both the Company and Parent, including, among others, the right to terminate in the event the closing of
the Offer has not occurred on or before August 15, 2021 (the “Outside Date”), provided that the Outside Date will
be automatically extended to November 15, 2021 if the closing conditions regarding the HSR Act have not been met as of August 15,
2021. In addition, the Company has agreed to pay Parent a termination fee of $275,000,000 in cash upon termination of the Merger
Agreement under certain specified circumstances, including, among others, (i) in order for the Company to enter into an alternative
transaction for a Superior Proposal, (ii) a change in the Company Board’s recommendation that the Company’s stockholders
tender their Shares in the Offer or (iii) a material and deliberate breach by the Company of the No-Shop Provisions.
Under the terms of the Merger Agreement,
immediately prior to the Effective Time, each then-outstanding Company equity or equity-based award will be automatically converted
into the right to receive the Offer Price (less the applicable exercise price per Share with respect to Company stock options),
without any interest thereon and less any required withholding taxes.
The foregoing description of the Merger
Agreement and the transactions contemplated thereby as set forth in this Item 1.01 does not purport to be complete and is subject
to, and qualified in its entirety by, the full text of the Merger Agreement, a copy of which is attached hereto as Exhibit 2.1
and is incorporated herein by reference.
The Merger Agreement has been included
to provide investors and stockholders with information regarding its terms and is not intended to provide any factual information
about the Company, Parent or Merger Sub. The representations, warranties and covenants contained in the Merger Agreement have been
made solely for the purposes of the Merger Agreement and as of specific dates; were solely for the benefit of the parties to the
Merger Agreement; are not intended as statements of fact to be relied upon by the Company’s stockholders or other security
holders, but rather as a way of allocating the risk between the parties to the Merger Agreement in the event the statements therein
prove to be inaccurate; have been modified or qualified by certain confidential disclosures that were made between the parties
in connection with the negotiation of the Merger Agreement, which disclosures are not reflected in the Merger Agreement itself;
may no longer be true as of a given date; and may apply standards of materiality in a way that is different from what may be viewed
as material by the Company’s stockholders or other security holders. The Company’s stockholders or other security holders
should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual
state of facts or circumstances of the Company, Parent or Merger Sub. Moreover, information concerning the subject matter of the
representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be
fully reflected in the Company’s or Parent’s public disclosures.