Home Depot completes $5.5B deal to boost pro business
Home Depot said Thursday it has completed a $5.5 billion acquisition, its latest move to boost business from professional contractors.
The home improvement giant said it finalized a deal to buy Tucker-based GMS Inc., a distributor of specialty building products including drywall, ceilings and steel framing.
The $5.5 billion deal, based on total enterprise value including debt, was announced in June.
Home Depot bought GMS through its subsidiary SRS Distribution, which the Vinings-based retailer acquired last year for $18.3 billion, its largest deal yet. SRS is a specialty trade distributor of roofing, landscaping and pool supplies.
GMS becomes a direct subsidiary of SRS and an indirect subsidiary of Home Depot.
Home Depot says the GMS deal helps grow its “share of wallet” with contractors across residential and commercial projects. It wants to simplify the buying process for contractors by reducing their number of suppliers and deliveries, executives said on the company’s second-quarter earnings call.
Combined, SRS and GMS will have a network of 1,200 locations, 3,500 sales associates and a fleet of nearly 8,000 trucks, Home Depot has said.
“We want to serve the pro across their entire project, and the combination of SRS and GMS will enable cross-selling synergies, strengthen our capabilities and bring even more opportunities to grow with this important customer,” Ted Decker, Home Depot chair, president and CEO, said Thursday in a prepared statement.
Home Depot’s business today is “equally split” between contractors and do-it-yourself customers, Decker said Wednesday at an annual Goldman Sachs retailing conference.
Decker, at the conference, said Home Depot could consider other mergers and acquisitions. “We’ll look at opportunities, always, on a case-by-case basis,” he said.
He said he does foresee smaller acquisitions that could expand distribution capabilities, “such as one-branch outfits in a new town that we might not have a presence.”
SRS has a history of acquiring small, often family-owned companies, averaging about 15 deals a year, according to CNBC. Decker said SRS has made about 10 deals since it took ownership of the company last year.
“We always look at the cost-benefit analysis of green fielding a new site versus acquiring an operation that has a robust customer base,” he said. “These are very modest in the scheme of things … Whether we do anything at scale anytime soon, we’ll continue to review that.”
About the Author
