As seen on Industrial Distribution. 

A consortium of private equity firms agreed to buy HD Supply from the Home Depot for $10 billion, The New York Times reported. An official announcement is expected later today.

Citing “people briefed on the negotiations,” the newspaper reported that a group made up of Bain Capital, the Carlyle Group and Clayton Dubilier & Rice will buy the home improvement retailer’s wholesale distribution business, trumping a rival group consisting of Thomas H. Lee Partners and CCMP Capital Advisors.

Firms in both groups have a history with HD Supply—Lee and CCMP sold National Waterworks to Home Depot, where it became of HD Supply, and CDR lost out to HD on its bid for Hughes Supply, which was also integrated into the wholesale division.

The companies also have connections in distribution. CDR, one of the owners of French electrical distributor Rexel, recently sold lab supply company VWR International Inc. to another private equity firm, Madison Dearborn Partners. Carlyle sold power transmission product manufacturer Rexnord Corp. to Apollo Management LP for $1.825 billion last year and bought Goodyear Tire & Rubber Co.’s  engineered products division for $1.475 billion in cash.

The HD Supply sale is an about-face for the Home Depot. Former CEO Robert Nardelli had planned to grow the distributor business he started in 2000 until it generated 20 percent of the retail gargantuan’s revenues. HD Supply’s $12.1 billion in 2006 revenues, which pushed it to second on INDUSTRIAL DISTRIBUTION’s 2007 Big 50 list of distributors, made up 13 percent of the Home Depot’s sales last year.

But investors, led by activist shareholder Ralph Whitworth’s Relational Investors group, protested that the division was a diversion from the company’s core retail business and chafed under Nardelli’s abrasive style and aggressive acquisition strategy.

Nardelli spent as much as $8 billion acquiring the 38 companies that constitute HD Supply, limited the company’s 2006 shareholders meeting to 45 minutes and declined to take any questions from stockholders.

The protests, and the company’s poor performance on the stock market, led to Nardelli’s ouster earlier this year. His more than $210 million severance package drew further outrage from shareholders and prompted worldwide discussions about excessive executive compensation.

Soon after, current CEO Frank Blake announced the company would seek “strategic alternatives” for HD Supply. Blake later won praise for the 2007 meeting, which was attended by all but one of the company’s board members and featured a lengthy question-and-answer period following the CEO’s presentation.

Private equity firms have driven 35 percent of all mergers in the United States since January, amounting to $313 billion in deals, the Financial News Online reported. Last year at the same time, equity players accounted for only 21 percent of mergers, according to the Web site.