The world’s largest home improvement retailer, Home Depot, has acquired SRS Distribution, one of America’s largest building suppliers. The US $150 billion retailer will take a major slice of the lucrative commercial and contractor business.
The US $18.25 billion deal, first reported in March, closed yesterday, now broadening the retail giant’s market to more than US $1 trillion and, significantly, giving it access to 760 new locations in 47 states, as well as 4,000 delivery trucks that, according to Home Depot, will provide it with access to more professional customers (or ‘pro-business’ clientele) who work on larger projects.
Home Depot, which has more than 2,300 stores across the United States, views the deal as a way to increase its e-commerce sales and attract more professionals while retaining do-it-yourself customers. It is also a part of a growing trend, as reported by Wood Central last year, whereby retail giants look to vertical and horizontal integration to capture a far greater share of the building supplies market.
Why Home Depot is moving into the pro-business industry
According to CNBC, the acquisition complements recent deals in the pro space. That includes the $8 billion acquisition of HD Supply in 2020 and two other acquisitions made last year of International Designs Group, which owns Construction Resources, and Temco, an appliance delivery and installation company. In addition, Home Depot has revealed plans to open four new distribution centres catering to pros who need supplies delivered to job sites.
“SRS is an excellent fit for The Home Depot – it’s both complementary and additive to our growth,” according to Ted Decker, chair, president and CEO of Home Depot. “Their ability to quickly build leadership positions in each of their specialty trade verticals is a testament to the team’s strong vision, leadership, culture and execution.”
In addition, “SRS’s outstanding customer service, capabilities, and expertise will help us drive value for our customers, associates and shareholders, and we’re excited to welcome the SRS team to The Home Depot,” Mr Decker said, adding that the acquisition will help Home Depot accelerate growth in residential construction, “whilst also presenting future opportunities in the specialty trade pro.”
SRS Distribution has rapidly grown in the last 16 years following a strategy centred on buying local and regional distributors. And according to SRS management, those acquisitions will continue to operate under their brands.
Under the terms of the agreement, SRS Distribution will operate as an independent business within the Home Depot conglomerate. Company management confirmed that “SRS’s role will be to grow what Home Depot calls its pro-business,” which includes contractors working on more challenging and lucrative projects who typically purchase supplies wholesale or through specialty distributors.
Under the deal’s terms, Dan Tinker, SRS Distribution’s CEO, will lead operations and report to Mr Decker. “I look forward to welcoming the entire SRS team to The Home Depot and capturing the exciting opportunity ahead,” Mr Decker said.
