Retailer Home Depot (HD) is purchasing privately held SRS Distribution for $18.25 billion U.S. as it bets on future growth coming from sales to professional contractors.
Home Depot’s management team has said during past earnings calls that its sales growth is being driven by contractors, roofers, and other home professionals coming out of the Covid-19 pandemic.
The home improvement retailer said that it expects the SRS Distribution acquisition to close by the end of January 2025. The deal is being financed through a combination of cash and debt.
Home Depot currently gets half of its business from professionals, while the other half comes from do-it-yourself homeowners.
However, sales to contractors and other professionals are viewed as more consistent and stable than homeowners, whose spending can fluctuate with the economy and housing market.
With the SRS acquisition, Atlanta-based Home Depot is targeting professionals who take on complex but lucrative housing projects.
Home Depot is also opening new distribution centres across the U.S. and Canada that stock large amounts of items that professionals need, such as lumber and shingles.
The company has also begun delivering building products directly to construction sites.
The purchase of SRS Distribution is the largest in Home Depot’s history. The company said the acquisition will increases its total addressable market by $50 billion U.S.
SRS Distribution sells supplies to professionals in the landscaping, pool, and roofing businesses. The Texas-based company has 11,000 employees and 760 branches across 47 American states.
Home Depot currently has 2,335 stores in the U.S., Canada and Mexico, and about 465,000 employees.
The stock of Home Depot has increased 37% over the last 12 months to trade at $385.89 U.S. per share.
