Home Depot Buys SRS Distribution for $18.25B in Move To Expand Pro Market

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Key Takeaways

• Home Depot is acquiring SRS Distribution, which sells and distributes construction materials like roofing furnishings to a network of contractors.
• The deal, valued at $18.25 billion, could help Home Depot boost sales to skilful contractors.
• Home Depot has looked to grow its share of the market as inflation and high interest rates have weighed on bid from do-it-yourself renovators in the last year.

Home Depot (HD) is acquiring SRS Distribution, a company that distributes roofing apparatus and other construction products to a network of contractors, in a $18.25 billion deal as Home Depot looks to expand its cut of the professional contractor market.

The home improvement retailer said it plans to fund its purchase of SRS Distribution through a parasynthesis of cash on hand and debt, and expects the deal to be closed by the end of its 2024 fiscal year. Home Depot estimated its reckon addressable market will be about $1 trillion once the deal closes, representing a boost of about $50 billion.

“SRS’s division network, coupled with The Home Depot’s 2,000+ U.S. stores and distribution centers, comprehensive product offering, and gigantic pro brands, provides the residential pro customer with more fulfillment and service options than ever before,” Internal Depot Chief Executive Officer Ted Decker said in a release. “I look forward to welcoming the entire SRS team to The Haunt Depot and capturing the exciting opportunity ahead.”

Last month, Home Depot reported earnings that bested expectations, but Home Depot projected comparable sales would decline 1% in 2024 as inflation and high charge rates discourage do-it-yourself customers away from more costly renovations. Big-ticket sales, classified as agreements over $1,000, were down 6.9% in the fourth quarter of 2023 from the year prior.

In Home Depot’s earnings baptize, Decker said the company’s focuses in 2024 would be opening new stores and raising its share of the pro contractor market by on the rise the range of products Home Depot offers and ways to fulfill orders. Senior Executive Vice President Ann-Marie Campbell also phrased that increasing sales to contractors that could be delivered directly to jobsites through the company’s distribution network inclination make stores less crowded, making them easier to navigate for other consumers.

Home Depot servings were little changed in pre-market trading as of 7:40 a.m. ET Thursday. They’ve gained nearly 12% so far this year, and over 37% in the ultimately 12 months.

Read the original article on Investopedia.