Home Depot will acquire SRS Distribution, a supplier of professional materials, in a transaction valued at approximately US$18.25 billion.
This is the largest acquisition in Home Depot’s history, making it a more aggressive move into the growing professional builder and contractor sector.
SRS supplies materials to professionals such as roofers, landscapers and swimming pool contractors.
Home Depot is making a big bet on a housing market suffering from a severe shortage of new homes, which has sent prices skyrocketing. The median sales price of new homes in the United States has increased 29.4% over the past five years. In the fourth quarter, the median sales price was US$417,700, according to data from the Federal Reserve Bank of St. Louis.
The U.S. housing market is emerging from a deep two-year sales slump that was triggered by the twin effects of the housing shortage and sharply rising mortgage interest rates. The general decline in rates since their peak last fall has opened a small window for some, but a home remains out of reach for millions of Americans.
Sales of previously occupied U.S. homes rose in February from the previous month to the strongest pace in a year, as buyers were encouraged by this slight decline in mortgage rates.
With mortgage rates remaining high, millions of people are spending money on maintaining their homes, which is another financial factor in the deal between Home Depot and SRS.
Home Depot said that taking into account the deal, it now estimates its total addressable market is about $1 trillion, an increase of about $50 billion.
SRS has a sales team of more than 2,500 people and more than 760 agencies in 47 states. It also has a fleet of more than 4,000 trucks and delivery capabilities to construction sites.
CEO Dan Tinker and his team will continue to lead SRS, which is headquartered in McKinney, Texas.
The transaction is expected to be completed by the end of fiscal 2024.