A Home Depot store in San Carlos, California, US, on Monday, Nov. 11, 2024.
David Paul Morris | Bloomberg | Getty Images
Home Depot said Monday that it is buying GMS, a building products distributor, for about $4.3 billion as the retailer moves to draw more sales from contractors and other home professionals.
Shares of Home Depot fell nearly 1% on Monday. GMS shares rose about 12% and touched a 52-week high.
As part of the deal, the Home Depot-owned subsidiary SRS Distribution will purchase all outstanding shares of GMS for $110 per share, which adds up to about $4.3 billion and amounts to total enterprise value including net debt of about $5.5 billion, the company said.
Home Depot said it expects the acquisition to be completed by early 2026.
Home Depot’s announcement also concludes a potential bidding war between the big-box retailer and billionaire Brad Jacobs. Jacobs’ building-products distributor QXO had offered about $5 billion in cash to acquire GMS and said it would press forward with a hostile takeover if the company’s management rejected the proposal.
As Home Depot chases growth, it’s gone after a steadier and more lucrative piece of the home improvement business: electricians, roofers, home renovators and other professionals who tackle large projects year-round and need a lot of supplies. Home Depot said it’s speeding along that strategy with the GMS deal.
Home Depot bought SRS Distribution — the subsidiary that’s acquiring GMS — last year for $18.25 billion, in the largest acquisition in its history. Texas-based SRS sells supplies to professionals in the landscaping, roofing and pool businesses and it has bought up many other smaller suppliers as it’s grown.
Home Depot’s focus on selling to professionals is well timed. Sales from do-it-yourself customers have slowed as higher mortgage rates have decreased housing turnover and dampened homeowners’ demand for larger projects because of higher borrowing costs.
The company said it expects total sales to grow by 2.8% for the full fiscal year and comparable sales, which take out the impact of one-time factors like store openings and calendar differences, to rise about 1%.