ATLANTA - The Home Depot (NYSE:HD), recognized as the world's largest home improvement retailer, has announced a definitive agreement to acquire SRS Distribution Inc., a prominent distributor serving various professional trade sectors, including roofing, landscaping, and pool contracting.
This strategic move is set to significantly expand Home Depot's reach within the residential professional market and enhance its distribution capabilities.
The acquisition, valued at approximately $18.25 billion, including net debt, is expected to be finalized by the end of fiscal 2024, pending customary closing conditions and regulatory approvals. The Home Depot anticipates funding the transaction through available cash and additional debt, with plans to access the debt capital markets for support.
SRS Distribution, with its extensive network of over 760 branches across 47 states and a professional sales force exceeding 2,500, is anticipated to bolster Home Depot's position in the market, increasing its total addressable market by an estimated $50 billion.
The merger is projected to be dilutive to The Home Depot's earnings per share (EPS) on a GAAP basis due to amortization expenses, yet accretive on a cash EPS basis in the first year post-closing, excluding synergies.
Ted Decker, chair, president, and CEO of The Home Depot, highlighted SRS's industry leadership and consistent profitable growth across its verticals as key drivers for the acquisition. He emphasized the complementarity of SRS's network with Home Depot's extensive store and distribution center footprint, which will offer residential professional customers more fulfillment and service options.
Dan Tinker, president and CEO of SRS, expressed enthusiasm about joining The Home Depot and leveraging the combined assets and capabilities of both companies to better serve professional customers and continue growing in the highly fragmented market.
Tinker and his senior leadership team will remain at the helm of SRS and collaborate closely with The Home Depot to deliver enhanced value propositions for professional customers.
The Home Depot, with a workforce of approximately 465,000 associates, operates 2,335 retail stores across North America and is listed on the New York Stock Exchange (NYSE: HD). This acquisition is poised to create significant shareholder value over the long term, according to Richard McPhail, executive vice president and CFO of The Home Depot.
This report is based on a press release statement.
InvestingPro Insights
The Home Depot's (NYSE: HD) announcement to acquire SRS Distribution Inc. marks a notable expansion strategy to enhance its distribution capabilities and market reach. As the company prepares to fund this significant acquisition through cash and debt, investors and market watchers are keenly observing its financial metrics and stock performance.
InvestingPro data shows that The Home Depot boasts a robust market capitalization of $376.52 billion, reflective of its leading position in the industry. The company's P/E ratio stands at 25.34, which aligns with its status as a mature and stable company in the retail sector. While revenue saw a slight decline of 3.01% over the last twelve months as of Q4 2024, The Home Depot still generated a substantial $152.67 billion, underscoring its significant market presence.
An InvestingPro Tip highlights that The Home Depot has raised its dividend for 14 consecutive years, demonstrating a strong commitment to returning value to shareholders. Additionally, the company's stock has been trading near its 52-week high, currently at 97.23% of this peak, indicating investor confidence in its market strategy and future prospects.
For those looking to delve deeper into The Home Depot's financials and stock performance, InvestingPro offers additional tips and metrics. Interested investors can find out more about the company's moderate level of debt, profitability predictions for the year, and its impressive return over the last decade. With 12 more InvestingPro Tips available, readers can gain comprehensive insights into The Home Depot's financial health and market position.
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