Home Depot will buy SRS Distribution, a provider of materials to professionals, in a deal valued at about $18.25 billion.
It’s Home Depot’s largest acquisition in its history, and with it moves more aggressively into its fast-growing professional construction and contractor business.
SRS supplies materials to professionals such as roofers, landscapers, and swimming pool contractors.
Home Depot is making a big bet on a housing market that is suffering from a severe shortage of new homes, sending prices skyrocketing. The average sales price of new homes in the United States has increased by 29.4% over the past five years. In the fourth quarter, sales prices averaged $417,700, according to data from the Federal Reserve Bank of St. Louis.
The U.S. housing market is beginning to emerge from a deep two-year sales slump, the result of a successive hit of too few homes and a sharp rise in mortgage interest rates. The general decline in interest rates since their peak last fall has opened a small window for some, though home remains out of reach for millions of Americans.
Sales of previously occupied US homes rose in February from the previous month to the strongest pace in a year as homebuyers were encouraged by a modest decline in mortgage rates.
As mortgage rates continue to rise, millions of people are spending money on maintaining the homes they own, another financial driver of the Home Depot, SRS deal.
Home Depot said that when the deal is taken into account, it now believes its total addressable market is about $1 trillion, an increase of about $50 billion.
“SRS has built a strong and successful platform that will accelerate our growth with residential professional customers while delivering future opportunities with specialty commercial professionals,” Home Depot CEO Ted Decker said in a statement.
SRS has a sales team of over 2,500 and over 760 branches in 47 states. It also has over 4,000 fleet of trucks and job site delivery capabilities.
“We look forward to combining our diverse assets and capabilities, including our extensive branch network, experienced sales team, strong trade credit offerings and order management system, geared toward serving the complex project purchase occasion, with The Home Depot’s competitive advantages.” said SRS CEO Dan Tinker. “We believe this will enable us to better serve professionals and continue to grow in our large and highly fragmented market.”
Tinker and his senior management team will continue to lead SRS, which is headquartered in McKinney, Texas.
The transaction is expected to close by the end of fiscal year 2024.
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