Home Depot’s $18.25 Billion Acquisition Deal for SRS Distribution: Driving Growth Beyond DIY Segment Amid Inflation

Home Depot has announced a major acquisition deal worth $18.25 billion to acquire building materials supplier SRS Distribution. The move is aimed at strengthening its business with professional customers amidst sluggish demand in the industry. Both Home Depot and rival Lowe’s Cos are expecting a slow recovery this year due to consumers holding off on major home renovation projects because of inflation.

With a focus on “Pro-customers” like builders, contractors, and handymen, Home Depot is seeking to drive sales beyond the DIY segment that makes up half of its business. The acquisition of SRS, the largest deal for Home Depot, will increase its potential market by $50 billion to around $1 trillion. SRS caters to Pro-customers such as roofers, landscapers, and pool contractors. It will operate as an independent unit under Home Depot’s umbrella with its leadership team remaining in place.

Home Depot CEO Ted Decker expressed optimism about the acquisition, stating that SRS has a successful platform that will accelerate growth with residential professional customers. The deal will bring SRS’ network of over 2,500 professional sales force in more than 760 locations to Home Depot’s existing footprint of over 2,000 U.S. stores and distribution centers. The transaction, which includes taking on SRS’ debt, will be financed through cash reserves and debt and is set to be finalized by the end of fiscal 2024. Despite the acquisition news, the share value of Home Depot remained stable before the market opened with a market capitalization of $382.42 billion.