Home Depot will acquire professional materials provider SRS Distribution in a deal valued at approximately $18.25 billion.
This is Home Depot's largest acquisition in its history and will allow it to move more aggressively into the rapidly growing professional builder and contactor business.
SRS provides materials for professionals such as roofers, landscapers, and pool contractors.
Home Depot is making a big bet on a housing market where prices are soaring due to a severe shortage of new homes. The median sales price of new homes in the United States has increased by 29.4% over the past five years. The median sales price in the fourth quarter was $417,700, according to data from the Federal Reserve Bank of St. Louis.
The U.S. housing market is emerging from a severe two-year sales slump caused by a one-two punch of very few homes and sharply rising mortgage rates. While the overall drop in interest rates since their peak last fall has opened a small window for some, housing remains out of reach for millions of Americans.
U.S. existing home sales rose in February from the previous month, the strongest pace in a year, as homebuyers were encouraged by a gradual decline in mortgage rates.
With mortgage rates still high, millions of people spend money on maintaining their homes, another economic driver of the Home Depot-SRS deal.
Home Depot said it believes the total addressable market for the company would be about $1 trillion, an increase of about $50 billion, given the deal.
“SRS has built a robust and successful platform, accelerating growth with our home specialist customers and positioning us for future engagement with specialty trade professionals,” Home Depot CEO Ted Decker said in a statement. It will present an opportunity.”
SRS has a sales team of more than 2,500 people and more than 760 branch offices in 47 states. We also have a fleet of more than 4,000 trucks and field delivery capabilities.
“We leverage our differentiated assets and capabilities, including our extensive branch network, experienced sales team, strong trade credit offerings, and order management systems for complex project purchasing opportunities, to provide a competitive advantage over Home Depot. We look forward to combining this with the advantages of SRS,” said Dan Tinker, CEO of SRS. “We believe this will allow us to better serve professionals and continue to grow in a large and highly fragmented market.”
Mr. Tinker and his senior management team will continue to lead SRS, which is based in McKinney, Texas.
The contract is expected to be completed by the end of 2024.
