Home Depot is diversifying its business model by acquiring SRS Distribution, a leading distributor in the professional roofing and building materials sector. The deal, valued at $18.25 billion, includes approximately $5.8 billion of SRS's debt, which Home Depot plans to settle post-acquisition.
SRS Distribution, backed by private equity, has expanded its footprint through the acquisition of local and regional distributors, maintaining their brand identities. With 760 locations and a fleet of 4,000 trucks, SRS brings materials directly to job sites, boasting about $10 billion in revenue last year.
This acquisition is part of Home Depot's broader strategy to bolster its presence in the complex professional contractor market, especially as sales in its core do-it-yourself retail segment have begun to wane. After experiencing a surge in sales during the pandemic, Home Depot witnessed a 3% decrease in sales, dropping to $152.7 billion last year.
Home Depot's push into the professional market is seen as a growth opportunity, leveraging its e-commerce capabilities in a sector still dominated by traditional sales methods. This follows the retailer's previous acquisition of Construction Resources, a move to strengthen its offerings to professional customers.
The acquisition of SRS Distribution is expected to enhance Home Depot's ability to cater to professional contractors' needs across a wider range of projects, capturing sales that would traditionally go to specialized suppliers. Dan Tinker, the current CEO of SRS, will continue to lead the company under Home Depot's ownership, reporting directly to Home Depot CEO Ted Decker.
Funded through a combination of cash reserves and new debt, the deal is anticipated to close by the end of this fiscal year, pending regulatory approvals.
