Home Depot to expand market reach with acquisition of SRS Distribution for $18.2bn

In a landmark move poised to reshape the landscape of the home improvement and specialty trade distribution sectors, The Home Depot, recognized globally as the largest home improvement retailer, has announced a definitive agreement for the acquisition of SRS Distribution Inc. (“SRS”). This strategic acquisition is valued at approximately $18.25 billion, including net debt, and is slated to significantly expand The Home Depot’s footprint in the industry, enhancing its services to professional roofers, landscapers, and pool contractors.

The acquisition of SRS Distribution, a frontrunner in residential specialty trade distribution across several verticals, is set to fast-track The Home Depot’s growth with the residential professional customer base. SRS’s robust capabilities and comprehensive service offerings are expected to complement The Home Depot’s existing operations, enabling the company to more effectively cater to complex project purchases for renovators and remodelers. Additionally, this move positions The Home Depot as a leading specialty trade distributor across multiple verticals.

Following the acquisition, The Home Depot’s total addressable market is now estimated to be approximately $1 trillion—an impressive increase of about $50 billion. Ted Decker, Chair, President, and CEO of The Home Depot, praised SRS for its industry leadership and remarkable track record of profitable growth, emphasizing the acquisition’s role in accelerating growth and unlocking new opportunities within the specialty trade professional sector.

SRS’s extensive network, which includes over 2,500 professional sales staff, more than 760 branches across 47 states, and a fleet of over 4,000 trucks, is expected to significantly bolster The Home Depot’s offerings to residential specialty trade professionals and renovator/remodelers. Dan Tinker, President and CEO of SRS, expressed enthusiasm about joining forces with The Home Depot, highlighting the combined capabilities of both entities to better serve professional customers and to continue expanding in a highly fragmented market.

The leadership team of SRS, including Dan Tinker, will remain at the helm, working closely with The Home Depot to optimize the value proposition for professional customers.

The acquisition, expected to close by the end of fiscal 2024, is subject to customary closing conditions and regulatory approvals. It will be financed through The Home Depot’s cash reserves and debt, with plans to access the debt capital markets for additional support. Richard McPhail, Executive Vice President and CFO of The Home Depot, anticipates the acquisition to enhance shareholder value over the long term, noting its expected accretive impact on cash earnings-per-share (EPS) in the first year post-closing, excluding synergies, despite anticipated dilution from a GAAP EPS perspective due to amortization expenses.

The Home Depot’s acquisition of SRS Distribution marks a pivotal development in the home improvement and specialty trade distribution industry, signifying a strategic expansion of The Home Depot’s service offerings and market presence. This acquisition not only underscores The Home Depot’s commitment to serving the professional customer segment but also reflects the company’s adaptive strategy in capturing a larger share of a rapidly evolving market. The integration of SRS’s specialized distribution network with The Home Depot’s vast resources and retail footprint is expected to create a formidable force in the industry, setting new standards for service excellence and customer satisfaction in the specialty trade sector.