Home Depot to Acquire Building Products Distributor for $18.3 Billion

Scott Peters
29 Mar, 2024
New York City

Home Depot agreed to acquire SRS Distribution as the company ramps up its offering to residential home contractors. 

Home offered to pay $18.25 billion for the building supply distributor, and the deal is expected to be finalized before the end of the current financial year and funded with additional debt and cash on hand. 

The company is currently owned by the private equity firms Leonard Green & Partners and Berkshire Partners. 

"SRS is an industry leader with a proven track record of profitable growth across verticals," said Ted Decker, chair, president, and chief executive of Home Depot. 

Home Depot has been looking to expand its offerings to professional customers who are active in building homes, providing roofing services, and carrying out large and complex renovation projects. 

Professional customers are just 10% of the company's customer base, but they drive about half of the company's sales. 

The specialty retailer was one of the major beneficiaries of the pandemic boom, but in the last two years, do-it-yourself activities have been shrinking as individuals focus on smaller projects while dealing with high prices. 

But in the last two years, the retailer has been struggling with a slowdown in the do-it-yourself segment as individual customers shift their attention away from expensive projects. 

SRS Distribution provides supplies to contractors involved in roofing, landscaping, and pool construction. 

The company will assume $5.5 billion of SRS's debt and raise about $12.5 billion in a debt offering; the balance will be funded by cash on hand. 

The company plans to maintain its current investment-grade rating after the debt offering.

The debt-funded transaction is expected to be dilutive to earnings per share due to amortization expenses, but accretive from a cash perspective in the first year and post-closing, excluding synergies.

The McKinny, Texas-based distribution company was founded in 2008 and generated revenue of $10 billion in 2023, or about 6% of Home Depot's sales. 

employs 11,000 people, has a network of 760 stores in 47 states, and has 4,000 delivery trucks and vehicles to deliver directly to the jobsite. 

Home Depot has been adding capabilities for its professional contractor space with the reacquisition of HD Supply for $8 billion in 2020, after selling the company for $10.3 billion to a group of private equity investors in 2007. 

Home Depot operates 2,335 stores in the U.S., Canada, and Mexico and employs about 465,000 people as of the end of its fiscal year in late January. 

The retailer confirmed that it plans to open new distribution centers in Detroit, Toronto, Los Angeles, and San Antonio and provide a wider set of products, including lumber, shingles, and insulation, to its professional customers.