Home Depot is acquiring building materials supplier SRS Distribution as it seeks to focus more on professional customers, the two companies announced in a joint press release on March 29.
The Atlanta-based home improvement company expects the acquisition to be completed by the end of fiscal 2024, according to the press release.
Under the terms of the agreement, a subsidiary of The Home Depot will acquire SRS for approximately $18.25 billion, including net debt.
The deal, which is still subject to customary closing conditions, including regulatory approvals, will be funded through cash on hand and debt.
It marks the largest acquisition in Home Depot’s history and comes as the retailer looks to home in on more professional customers such as roofers and landscapers amid a downturn in home remodeling, renovations, and DIY as inflation has soared.
Home Depot said the acquisition of SRS will “accelerate its growth with the residential professional customer,” enabling it to better serve “complex project purchase occasions,” while also establishing the retailer as a “leading specialty trade distributor across multiple verticals.”
The company expects the deal will expand its total addressable market by about $50 billion, to roughly $1 trillion.
Home Depot Targeting ‘Residential Pro Customer’
The McKinney, Texas-based company SRS Distribution is owned by private equity firms Leonard Green & Partners and Berkshire Partners.Ted Decker, chair, president, and CEO of Home Depot, touted SRS as being “an industry leader with a proven track record of profitable growth across verticals,” in a statement announcing the deal.
“SRS’s ability to build leadership positions in each of its trade verticals while generating significant revenue growth is a testament to its strong vision, leadership, culture, and execution,” he said. “SRS has built a robust and successful platform that will accelerate our growth with the residential professional customer while presenting future opportunities with the specialty trade pro.”
Mr. Decker added that SRS’s branch network of more than 2,500 professional sales force in more than 760 locations, coupled with Home Depot’s more than 2,000 stores and distribution centers throughout the United States, will provide the residential pro customer with “more fulfillment and service options than ever before.”
Pause on Home Renovations Continues
“Our team is thrilled to join The Home Depot,” said Dan Tinker, SRS’s president and CEO. “We are looking forward to combining our differentiated assets and capabilities, including our extensive branch network, experienced sales team, robust trade credit offering, and order management system, geared at serving the complex project purchase occasion, with The Home Depot’s competitive advantages.“We believe this will enable us to better serve pros and continue growing in our large and highly fragmented market,” Mr. Tinker added.
The latest announcement comes as Home Depot has announced a string of other deals in recent years, including an $8 billion acquisition of HD Supply, one of the largest wholesale distributors of maintenance, repair, and operations in North America, in 2020.
Last year, the home improvement firm acquired International Designs Group, a platform company that owns and operates construction resources and other design-oriented subsidiaries.
The company has also announced plans to open multiple new stores and distribution centers this year as part of its strategy to bolster sales among remodelers, contractors, and other home professionals.
It comes as the home improvement retailer projects a slower recovery and stale sales trends this year as the pause on consumer home renovation continues.
Shares of Home Depot were down 0.77 percent as of 09:49 a.m. EST, but the retailer’s stock has surged more than 36 percent in the past year.
