Home Depot’s SRS Distribution to acquire GMS for $110 per share

Investing.com - Home Depot (NYSE:HD), the $365 billion specialty retail giant with a strong GOOD financial health rating according to InvestingPro, announced its subsidiary SRS Distribution plans to acquire GMS for $110 per share in a cash and debt transaction, according to Barclays (LON:BARC).

Barclays maintained an Equalweight rating on Home Depot stock while raising its price target to $110.00 from $95.00 following the acquisition announcement. The company currently trades at $366.60, with analyst targets ranging from $308 to $484.

The research firm expects GMS shareholders to view the deal positively, noting the transaction comes with an attractive multiple and potential synergies.

Barclays indicated the acquisition is likely to face minimal opposition, partly due to a high termination fee that would make it costly to back out of the agreement.

The acquisition represents a strategic expansion for SRS Distribution, Home Depot’s subsidiary, though specific details about expected synergies or integration plans were not provided in the analyst commentary.

In other recent news, Home Depot’s subsidiary, SRS Distribution, has entered into a definitive agreement to acquire GMS Inc (NYSE:GMS). for $4.3 billion, with an enterprise value of $5.5 billion, including net debt. This acquisition aims to expand SRS’s distribution network significantly, adding more than 1,200 locations and over 8,000 trucks. The transaction, expected to close by the end of fiscal 2025, will be funded through cash on hand and debt. Home Depot anticipates this deal will be accretive to adjusted earnings per share in the first year after closing. In related developments, TD Cowen and Truist Securities have maintained their Buy ratings on Home Depot, with price targets set at $470 and $417, respectively, amid the company’s bid for GMS. TD Cowen noted Home Depot’s strong track record with mergers, while Truist highlighted the acquisition’s potential to enhance the company’s distribution capabilities in the professional contractor market. Additionally, Home Depot has appointed Angie Brown as the new Executive Vice President and Chief Information Officer, succeeding Fahim Siddiqui, to lead its technology strategy. Brown brings 27 years of experience with the company and has been instrumental in advancing digital initiatives.

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