The Home Depot Buying SRS In $18.25 Billion Deal

By Amit Chowdhry • Mar 28, 2024

The Home Depot announced today that it is acquiring SRS Distribution for $18.25 billion. This deal evidences The Home Depot’s goal of driving sales by winning more business from roofers, contractors, and handy professionals.

This is Home Depot’s largest acquisition. In 2020, Home Depot bought back HD Supply Holdings for $8 billion after selling it to a consortium of private equity firms for $8.5 billion in 2007. Last year, Home Depot also acquired International Designs Group and Temco.

SRS is expected to accelerate The Home Depot’s growth with the residential professional customer. And SRS complements The Home Depot’s capabilities and will enable the company to better serve complex project purchase occasions with the renovator/remodeler, while also setting up The Home Depot as a leading specialty trade distributor across multiple verticals.

Through this acquisition, The Home Depot now believes its total addressable market is about $1 trillion, an increase of approximately $50 billion.

The deal is expected to close this fiscal year, which ends in late January. It will be financed with debt and cash on hand.

Based in McKinney, Texas, SRS Distribution has about 11,000 employees and 760 locations across 47 states. The company also has a fleet of 4,000 delivery trucks. As of the end of the fiscal year in late January, Home Depot was operating 2,335 stores across the U.S., Canada, and Mexico. And the home improvement retail giant has about 465,000 employees.

The deal is expected to dilute Home Depot’s earnings per share when accounting for amortization but accretive regarding cash earnings per share for the first year after the deal closes. Home Depot plans to maintain its current credit ratings.

SRS president and CEO Dan Tinker and his senior leadership team will continue to lead SRS. Tinker and his team will work closely with The Home Depot to deliver the best value proposition for all pro customers.

J.P. Morgan Securities LLC served as The Home Depot’s exclusive financial advisor, and Weil, Gotshal & Manges LLP provided legal counsel in connection with the transaction.

KEY QUOTES:

“SRS is an industry leader with a proven track record of profitable growth across verticals. SRS’s ability to build leadership positions in each of its trade verticals while generating significant revenue growth is a testament to its strong vision, leadership, culture and execution. SRS has built a robust and successful platform that will accelerate our growth with the residential professional customer while presenting future opportunities with the specialty trade pro.”

“SRS’s branch network, coupled with The Home Depot’s 2,000+ U.S. stores and distribution centers, comprehensive product offering, and extensive pro brands, provides the residential pro customer with more fulfillment and service options than ever before. I look forward to welcoming the entire SRS team to The Home Depot and capturing the exciting opportunity ahead.”

  • Ted Decker, chair, president, and CEO

“Our team is thrilled to join The Home Depot. We are looking forward to combining our differentiated assets and capabilities, including our extensive branch network, experienced sales team, robust trade credit offering, and order management system, geared at serving the complex project purchase occasion, with The Home Depot’s competitive advantages. We believe this will enable us to better serve pros and continue growing in our large and highly fragmented market.”

  • Dan Tinker, SRS’s president and CEO

“We plan to access the debt capital markets to raise incremental indebtedness in support of this acquisition. We expect the acquisition to create significant shareholder value over the long term.”

  • Richard McPhail, executive vice president and CFO