8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported) August 20, 2007

W.W. Grainger, Inc.

(Exact Name of Registrant as Specified in its Charter)

Illinois

(State or Other Jurisdiction of Incorporation)

1-5684	36-1150280
(Commission File Number)	(I.R.S. Employer Identification No.)

100 Grainger Parkway, Lake Forest, Illinois	60045-5201
(Address of Principal Executive Offices)	(Zip Code)

(847) 535-1000

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

On August 20, 2007, in connection with the restored repurchase authority referred to in Item 7.01 below, the Registrant entered into an accelerated share repurchase agreement to purchase approximately $500 million of its outstanding common stock from Goldman Sachs & Co. (“GSC”). The exact purchase price per share and number of shares to be delivered by GSC will be fixed in accordance with the agreement, which is expected to have a term not to exceed eight months. The agreement will be settled at its conclusion with the Registrant either receiving or paying a settlement amount based on the volume weighted average price of the Registrant’s common stock during the term of the agreement. The Registrant may elect to receive or pay any settlement amount in cash or shares of its common stock.

Item 7.01. Regulation FD Disclosure.

On August 20, 2007, the Registrant issued a press release announcing that its Board of Directors had restored the Registrant’s authorization for repurchase of shares of its common stock to a total of 10 million shares. In connection with the restored repurchase authority, the Registrant entered into an accelerated share repurchase agreement to purchase approximately $500 million of its outstanding common stock from Goldman Sachs & Co. (“GSC”). A copy of the press release is attached as Exhibit 99 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits (numbered in accordance with Item 601 of Regulation S-K).

Exhibit No.	Document Description
99	Press release issued by the Company on August 20, 2007.*

* This exhibit is intended to be furnished and shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934, as amended.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	W.W. GRAINGER, INC.
Dated: August 20, 2007	By:	/s/ John L. Howard
		John L. Howard Senior Vice President and General Counsel

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EX-99

Exhibit 99

News Release

W.W. Grainger, Inc. 100 Grainger Parkway Lake Forest, IL 60045-5201 www.grainger.com/investor

William D. Chapman	Ernest Duplessis
Director, Investor Relations	Director, External Communications
847-535-0881	847-535-4356
william.chapman@grainger.com	ernest.duplessis@grainger.com

GRAINGER EXECUTES $500 MILLION

ACCELERATED SHARE REPURCHASE PROGRAM

Board increases share repurchase authorization to 10 million shares

CHICAGO, August 20, 2007 – Grainger (NYSE: GWW), the leading industrial distributor in North America, today announced that it has entered into an accelerated share repurchase (ASR) agreement with Goldman, Sachs & Co. to purchase $500 million of its outstanding common stock, with the majority of the shares received immediately. The exact number of shares bought back will be determined at the conclusion of the agreement, which could take up to eight months to complete. Grainger does not expect to make any additional share repurchases until the program concludes. The company anticipates funding about half of this purchase with existing cash and the rest with short-term borrowings.

The company estimates that this action will benefit earnings per share by 1 cent for the remainder of 2007 because the ASR accelerates the company’s share repurchase program. The benefit is partially offset by lower interest income, higher interest expense and other related costs. The full-year benefit in 2008 by buying now is expected to be approximately 11 cents per share.

To facilitate the agreement, Grainger’s Board of Directors has restored the company’s share repurchase authorization to 10 million shares of common stock, including shares to be purchased through the accelerated share repurchase program announced today.

W.W. Grainger, Inc.

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“Grainger’s strong performance and its consistent cash generation convince us that this accelerated share repurchase program is another effective way to increase shareholder value beyond the opportunities we have to grow our business,” said Grainger Chairman and Chief Executive Officer Richard L. Keyser. “Taking action now reflects the recent stock market volatility.”

Grainger, through its share repurchase program, which started in 1984, has bought back more than 56 million shares for around $2.5 billion. As a result, the company has reduced the number of shares outstanding by approximately 31 percent. In addition to its share repurchase program, the company has increased its quarterly dividends for the past 36 consecutive years, most recently in April 2007 when the Board approved a 21 percent increase to 35 cents per share. “Grainger has demonstrated for many years its willingness to return excess cash to its shareholders,” said Keyser. “We continue to seek ways to improve shareholder value through investment in the business, share buybacks and dividends.”

W.W. Grainger, Inc. (NYSE: GWW), with 2006 sales of $5.9 billion, is the leading broad line supplier of facilities maintenance products serving businesses and institutions throughout North America. Through a highly integrated network including nearly 600 branches, 18 distribution centers and multiple Web sites, Grainger’s employees help customers get the job done, saving them time and money by having the right products to keep their facilities running.

Forward-Looking Statements

This document contains forward-looking statements under the federal securities laws. The forward-looking statements relate to the company’s expected future financial results and business plans, strategies and objectives and are not historical facts. They are generally identified by qualifiers such as “will be determined,” “could take up to,” “does not expect,” “anticipates,” “estimates,” “expected,” “to be purchased,” “going forward,” or similar expressions. There are risks and uncertainties the outcome of which could cause the company’s results to differ materially from what is projected. The forward-looking statements should be read in conjunction with the company’s most recent annual report, as well as the company’s Form 10-K and other reports filed with the Securities & Exchange Commission, containing a discussion of the company’s business and of various factors that may affect it.

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