Home Depot to Shake Up Builders Market After Closing $18b Deal

Home Depot hopes to gain more professional customers who work on larger projects through the acquisition of SRS Distribution, which supplies roofers and other contractors.

Wed 03 Apr 24


The world’s largest home improvement retailer, Home Depot, has acquired one of the United States’ largest building suppliers, SRS Distribution Inc., in what is its strongest intention yet that it will aggressively target a slice of the lucrative commercial construction and contractor market.

The US $18 billion deal broadens the retail giant’s market to more than US $1 trillion and, significantly, gives 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 greater access to more professional customers (known as 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 continues a 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. 

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, according to a Wall Street Journal report, Home Depot has revealed plans to open four new distribution centres catering to pros who need supplies delivered to job sites.

The acquisition of SRS Distribution Inc., which sells supplies for professional roofers and other contractors, is expected to close by the end of the fiscal year in late January with Home Depot management confirming that the deal will be financed through a combination of cash and debt. 

SRS, which is currently owned by a private equity firm, is “an industry leader with a proven track record of profitable growth,” according to Home Depot CEO Ted Decker, who added that “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 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 will operate as an independent business within the Home Depot conglomerate, with company management confirming, via a company statement, 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, subject to regulatory approval, Dan Tinker, SRS’s current CEO, will lead SRS 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.


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