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MCKINNEY, Texas - The Home Depot, a prominent player in the Specialty Retail industry with a market capitalization of $367 billion and an overall GOOD financial health score according to InvestingPro, announced Monday that its specialty trade distribution subsidiary, SRS Distribution, has entered into a definitive agreement to acquire GMS Inc., a North American specialty building products distributor, for $110 per share in cash.
The all-cash transaction values GMS’s equity at approximately $4.3 billion, with a total enterprise value of about $5.5 billion including net debt. The acquisition will expand SRS’s distribution network to more than 1,200 locations with a fleet exceeding 8,000 trucks. Home Depot, which generated revenues of $163 billion in the last twelve months, operates with a moderate level of debt and maintains strong cash flows, positioning it well for this strategic acquisition.
GMS, founded in 1971, operates more than 300 distribution centers offering wallboard, ceilings, steel framing and complementary products, along with nearly 100 tool sales, rental and service centers across the United States and Canada.
"The Home Depot acquired SRS as a platform for growth, and SRS continues to demonstrate exceptional execution and strong performance," said Ted Decker, chair, president and CEO of The Home Depot.
Under the agreement terms, SRS will commence a cash tender offer for all outstanding shares of GMS. The transaction is subject to customary closing conditions, including regulatory approvals and tender of a majority of outstanding GMS shares.
John C. Turner, Jr., GMS’s president and CEO, will continue to lead GMS as part of the SRS organization following the acquisition.
The transaction, expected to be completed by the end of fiscal 2025, will be funded through cash on hand and debt. Home Depot stated the acquisition is expected to be accretive to adjusted earnings per share in the first year after closing, excluding synergies.
The company does not expect the transaction to alter its plan to return to a 2.0x leverage ratio by the end of fiscal 2026.
According to the press release statement, the acquisition aligns with Home Depot’s strategy to grow its share of wallet with professional contractors and build differentiated offerings for professionals across their entire project spectrum. The company has demonstrated consistent shareholder value, having maintained dividend payments for 39 consecutive years with a current yield of 2.49%. For deeper insights into Home Depot’s financial metrics and growth potential, including exclusive ProTips and comprehensive analysis, visit InvestingPro, where you’ll find detailed research reports and expert commentary.
In other recent news, Home Depot has declared a quarterly cash dividend of $2.30 per share, marking its 153rd consecutive quarter of dividend payouts. This announcement reflects the company’s ongoing commitment to returning value to its shareholders. Additionally, Home Depot has made a significant move by submitting a competing bid to acquire specialty distributor GMS, valued at approximately $5 billion. This potential acquisition aims to expand Home Depot’s reach in the professional contractor market, following its recent $18 billion acquisition of SRS Distribution. Analyst firms TD Cowen and Truist Securities have both maintained their buy ratings on Home Depot, with price targets of $470 and $417, respectively. TD Cowen noted Home Depot’s solid sales momentum and effective tariff mitigation strategies, while Truist highlighted the strategic benefits of the GMS acquisition in the context of accelerating housing demand. In leadership news, Angie Brown has been appointed as the new Executive Vice President and Chief Information Officer, bringing her extensive experience to oversee the company’s technology strategy. These developments underscore Home Depot’s strategic initiatives and operational advancements.
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