SUBSEQUENT EVENT	9 Months Ended
Nov. 01, 2020
SUBSEQUENT EVENT
SUBSEQUENT EVENT	NOTE 14 – SUBSEQUENT EVENT On November 15, 2020, Holdings 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 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 Board of Directors 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 million 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 Board of Directors’ 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. Four lawsuits had been filed by December 3, 2020 relating to the Offer and the Merger in federal and state courts by purported individual or trust shareholders against the Company, its directors and, in one case, Home Depot. The cases are, in the order by which they were filed: Stein v. HD Supply Holdings, Inc., et al., 1:20-cv-01605 (D. Del. Nov. 25, 2020); Vandunk v. HD Supply Holdings, Inc., et al., 1:20-cv-05777 (E.D.N.Y. Nov. 30, 2020); Drulias v. DeAngelo, et al., Index No. 656625/2020 (N.Y. Cty. Sup. Ct. Nov. 30, 2020); and Rosenfeld Family Found. v. HD Supply Holdings, Inc., et al., 1:20-cv-04854 (N.D. Ga. Dec. 1, 2020). The complaints generally allege that the Schedule 14D-9, and, in one case, the Schedule TO, misrepresent and/or omit certain purportedly material information and assert violations of Sections 14(e) and 14(d) of the Securities Exchange Act of 1934, rules thereunder or common law fraud and/or negligent misrepresentation or concealment. The alleged material misstatements and omissions relate to, among other topics, the Company’s forecasts, Goldman Sachs’ financial analysis, the interests of directors and officers in the Offer and the Merger and events giving rise to the Offer and the Merger. The plaintiffs in each of the foregoing actions seek, among other things, an injunction against the consummation of the Offer and the Merger or, in the alternative, rescission damages, as well as an award of costs and expenses (including attorneys’ and experts’ fees and expenses). The Company believes each of the allegations lack merit and intends to vigorously defend against them.

SUBSEQUENT EVENT

9 Months Ended

Nov. 01, 2020

NOTE 14 – SUBSEQUENT EVENT

On November 15, 2020, Holdings 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 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 Board of Directors 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 million 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 Board of Directors’ 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.

Four lawsuits had been filed by December 3, 2020 relating to the Offer and the Merger in federal and state courts by purported individual or trust shareholders against the Company, its directors and, in one case, Home Depot. The cases are, in the order by which they were filed: Stein v. HD Supply Holdings, Inc., et al., 1:20-cv-01605 (D. Del. Nov. 25, 2020); Vandunk v. HD Supply Holdings, Inc., et al., 1:20-cv-05777 (E.D.N.Y. Nov. 30, 2020); Drulias v. DeAngelo, et al., Index No. 656625/2020 (N.Y. Cty. Sup. Ct. Nov. 30, 2020); and Rosenfeld Family Found. v. HD Supply Holdings, Inc., et al., 1:20-cv-04854 (N.D. Ga. Dec. 1, 2020). The complaints generally allege that the Schedule 14D-9, and, in one case, the Schedule TO, misrepresent and/or omit certain purportedly material information and assert violations of Sections 14(e) and 14(d) of the Securities Exchange Act of 1934, rules thereunder or common law fraud and/or negligent misrepresentation or concealment. The alleged material misstatements and omissions relate to, among other topics, the Company’s forecasts, Goldman Sachs’ financial analysis, the interests of directors and officers in the Offer and the Merger and events giving rise to the Offer and the Merger. The plaintiffs in each of the foregoing actions seek, among other things, an injunction against the consummation of the Offer and the Merger or, in the alternative, rescission damages, as well as an award of costs and expenses (including attorneys’ and experts’ fees and expenses). The Company believes each of the allegations lack merit and intends to vigorously defend against them.