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Investing.com - GMS Inc . (NYSE:GMS) has entered into a definitive agreement to be acquired by The Home Depot (NYSE:HD) through its SRS subsidiary for $110 per share, according to DA Davidson. The stock, which currently trades at $108.85, has shown remarkable momentum with a 39% return over the past year, according to InvestingPro data.
The offer represents approximately a 16% premium over the unsolicited $95.20 per share bid made by QXO on June 18, DA Davidson analyst Kurt Yinger noted in a research report.
The analyst maintained a Neutral rating on GMS stock with a price target of $110.00, matching the acquisition offer price.
DA Davidson views the likelihood of a superior proposal as unlikely, citing the termination fee GMS would be required to pay Home Depot should the company enter into an alternative transaction.
The firm also highlighted the "healthy 11x forward EBITDA valuation" that Home Depot’s bid represents for the building materials distributor.
In other recent news, Home Depot has agreed for its subsidiary SRS to acquire Gypsum Management & Supply (GMS) for $110 per share. This acquisition follows an initial bid by Quikrete Holdings (QXO) at $95.20 per share, and it marks another step in Home Depot’s strategy to expand its Pro ecosystem. TD Cowen has reiterated its Buy rating on Home Depot, maintaining a price target of $470.00, and notes that the acquisition is expected to be accretive. Meanwhile, RBC Capital has raised its price target for GMS to $95.20, aligning with QXO’s offer, and maintains a Sector Perform rating. Truist Securities also increased its price target for GMS to $105.00, speculating that GMS might be acquired at higher levels, while Loop Capital adjusted its target to $95.00 following the takeover offers. Baird downgraded GMS from outperform to neutral, citing the acquisition bid dynamics and the unlikely emergence of a materially higher competing bid from Home Depot. The developments have led to significant interest in GMS, with analysts closely monitoring the potential outcomes of these acquisition proposals.
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