William Blair analyst Ryan Merkel expects shares of HD Supply Holdings (HDS) to trade near $40 as investors discount potential value creation from a Facilities Maintenance buyout. The stock in premarket trading is up 5% to $39.75. The company last night announced that it is separating its Facilities Maintenance and Construction and Industrial units into publicly traded companies. The analyst, while applauding the decision, believes the separation itself is not value creating based on peer multiples. Because of execution issues and slower growth at Facilities Maintenance, a multiple consistent with W.W. Grainger (GWW) is appropriate, Merkel tells investors in a research note. Construction and Industrial could also be acquired, but this seems less likely near term, says the analyst. He believes C&I could fetch an 11 times EBITDA multiple in a takeout, increasing the value creation from the separation to $49 per HD Supply shares. Merkel keeps an Outperform rating on the name.