Home Depot boosts pro business with $18.25 billion SRS Distribution acquisition

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In a move signaling its commitment to expanding its professional customer base, Home Depot announced on Thursday its acquisition of SRS Distribution in an $18.25 billion deal. This deal marks the largest acquisition in Home Depot’s history and underlines its strategy to capture a larger share of the market for contractors, roofers, and other home professionals.

Home Depot, already deriving half of its business from professional customers, aims to further strengthen its position in this segment with the acquisition. As homeowners increasingly turn away from DIY projects, Home Depot sees an opportunity to cater to the needs of professionals tackling complex and lucrative construction jobs. To support this effort, the retailer has been expanding its network of distribution centers to efficiently stock and deliver large quantities of items needed by professionals, such as lumber and shingles.

SRS Distribution, based in McKinney, Texas, operates across 47 states with approximately 11,000 employees and 760 branches. The company specializes in supplying professionals in the landscaping, pool, and roofing businesses. With a fleet of 4,000 delivery trucks and a dedicated salesforce, SRS Distribution has established a strong presence in serving the needs of home professionals.

CEO Ted Decker described the acquisition as “a complementary accelerator” to Home Depot’s pro-focused initiatives, increasing the company’s total addressable market by $50 billion. The acquisition of SRS Distribution adds to Home Depot’s recent pro-focused acquisitions, including the approximately $8 billion acquisition of HD Supply in 2020.

Despite the expected dilution to Home Depot’s earnings per share due to amortization, the acquisition is anticipated to be accretive in terms of cash earnings per share in the first year after the deal closes. Decker expressed confidence in gaining regulatory approval for the deal, emphasizing the separate customer base and different channels served by Home Depot and SRS Distribution.

As Home Depot continues to navigate moderating sales growth, particularly in light of shifting consumer spending patterns, the retailer remains focused on expanding its pro business, enhancing the customer shopping experience, and opening new stores. Home Depot plans to open a dozen new stores during the fiscal year and recently announced the opening of four distribution centers catering to professionals.

(Source: CBS | PR Newswire | WSJ)

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