US home improvement retailer The Home Depot has agreed to purchase building products distributor GMS for $5.5bn including net debt, expanding its offerings to professional contractors.
GMS has more than 300 construction supply locations across North America. It will be integrated into Home Depot’s speciality trade distribution subsidiary SRS Distribution.
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The strategic move is part of The Home Depot’s growth strategy and aims to support contractors’ in projects ranging from large-scale constructions to smaller renovations.
In 2024, The Home Depot’s acquisition of SRS marked its entry into speciality trade distribution, covering sectors such as roofing, landscaping and pool supplies.
The addition of GMS is set to further SRS’s goal to become a top multi-category building materials distributor.
GMS’s expertise in distributing products such as drywall, ceilings and steel framing will complement SRS’s existing operations and extend its distribution network across the US and Canada.
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By GlobalDataThe leadership of GMS, including John C Turner and his senior team, will continue to manage the company under the SRS umbrella.
SRS CEO Dan Tinker stated: “The combination of GMS and SRS will provide the residential and commercial pro customer with more fulfilment and service options than ever before. Together, we’ll create a network of more than 1,200 locations and a fleet of more than 8,000 trucks capable of making tens of thousands of jobsite deliveries per day.”
SRS will initiate a cash tender offer to acquire all GMS common stock for $110 per share, valuing the equity at $4.3bn.
The transaction will be financed through existing cash and debt but is not expected to impact The Home Depot’s target of a two times leverage ratio by the end of fiscal 2026.
The acquisition is projected to increase adjusted earnings per share in the first year post-closing, not including synergies.
GMS chair John Gavin stated: “Following careful consideration of The Home Depot’s proposal, along with other potential opportunities for the company, our board determined that this transaction is in the best interests of GMS and all of our shareholders.
“Not only does this outcome deliver significant and certain value to our shareholders, but it also has the added benefit of bringing GMS together with The Home Depot and SRS, where we are confident our employees will flourish, our customers and suppliers will benefit from our increased offerings and resources, and we will honour the legacy of our founders who made all of this possible.”
BofA Securities and JP Morgan Securities acted as financial advisors for this transaction, while Weil, Gotshal & Manges provided legal counsel to The Home Depot.
