The sale of Home Depot's wholesale supply unit has been seen as an important test of whether big private-equity deals can still be made as financing becomes more expensive.

It appears it will get done-but for about $1.2 billion less than the price of $10.3 billion that was set when Home Depot announced the sale in June, the Wall Street Journal reports.

At the time the deal was announced in June, Merrill Lynch, J.P. Morgan Securities, and Lehman Brothers had agreed to provide financing.  Since then, of course, the credit markets have been roiled by fears about escalating problems stemming from investments tied to subprime mortgages, and the cost of corporate loans has risen. At the same time, the housing market has continued to slump, damaging the prospects for the supply unit.

The deal with the consortium of Bain Capital, Carlyle Group and Clayton Dubilier & Rice was expected to close on Thursday. The Journal reports that there was "a flurry of negotiations" to get a revised deal done.

The private equity firms have some leverage to do that because Home Depot has been counting on using the proceeds from a sale to help finance a previously announced stock buyback. Shares of Home Depot slumped on Thursday on concerns that the sale will be abandoned.

The Financial Times quotes a merger arbitrageur who contends that if the banks balk at financing the Home Depot deal, it would have a negative effect on larger buyouts set to close this fall.