It’s Official: Home Depot Closes on $18B SRS Deal

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Less than 90 days after The Home Depot, the 20th largest publicly traded company in the United States according to the Forbes 500, announced plans to acquire SRS Distribution, the deal was finalized yesterday for an estimated $18.25 billion.

Last Friday, Home Depot announced that the mandatory waiting period required by the Hart-Scott-Rodino Antitrust Improvements Act had concluded, signaling the transaction would be completed within the coming days. And, as promised, yesterday afternoon, news broke that SRS — one of the top three companies in the roofing distribution industry — had ceased to exist as an independent entity.

“SRS is an excellent fit for The Home Depot — it’s both complementary and additive to our growth,” said Ted Decker, chair, president and CEO of The 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 announcing the closing in a June 18 news release, Home Depot, which has a market capitalization of around $350.9 billion and is the country’s fourth-largest retailer — eclipsed only by Amazon, Walmart and Costco, respectively — said the SRS purchase will increase the company’s total addressable market by approximately $50 billion to roughly $1 trillion.

Already the world’s largest home improvement retailer, Home Depot’s purchase of SRS — a national distributor of roofing and building construction materials in 47 states with more than 760 brand-independent locations — positions the retailer to dominate the building envelope space.

“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,” Decker added.

Founded in 2008 and headquartered in McKinney, Texas, SRS became one of the fastest-growing building products distributors nationally. With the heft of Home Depot, which operates 2,337 retail stores in all 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, 10 Canadian provinces and Mexico, the combined operation has leap-frogged over every other supplier within the construction supply sphere.

Home Depot said the combined company will accelerate its growth with the residential professional customer. With 465,000 full-time employees, adding SRS’ fleet of 4,000 delivery trucks, its 2,500-plus salesforce and the inherited associations through nearly 20 years of distributor-contractor relationships, the long-term implications on the combined companies are still unknown. 

A Pro Desk at a Home Depot store (pictured).The ‘New’ Pro Desk

As a leading residential specialty trade distribution company across several verticals that serve professional roofers, landscapers and pool contractors, the SRS deal will further bolster Home Depot’s already burgeoning professional services offerings. 

According to PYMNTS, a website that tracks large companies and where their revenue streams are derived, while professional contractors and builders make up just 10% of Home Depot’s customer base, they represent around 50% of the company’s sales, making them a mission-critical consumer audience for the home improvement retailer.

“We haven’t talked much about the pro in this call,” Decker told investors during a fourth-quarter 2022 earnings presentation in February 2023. “But we are still 100% focused on building out all the capabilities in the pro ecosystem that will allow us to capture more wallet share with the pro and move up to larger purchases.”

While the SRS purchase is by far Home Depot’s largest acquisition, the company laid the foundation for the expansion. In March, the retailer said it would open four new distribution centers to serve pro customers during the first half of 2024. The company also recently acquired Construction Resources, a distributor of design-oriented surfaces, appliances and architectural specialty products for pro contractors.

Founded in 1978 and headquartered in Atlanta, the company’s steady growth allowed it to overtake its rival, Lowe’s, in 1989, making it the largest home improvement store in the United States. It hasn’t looked back since.

Investors rewarded the inking yesterday as shares of Home Depot, trading on the New York Stock Exchange, closed up more than four points or 1.25% to $353.87 per share in heavy trading; after-hours trading remained bullish, with HD shares up an additional $0.33 per share or .09% at $354.20.

For more information, visit homedepot.com.

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