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Investing.com - DIY chain Home Depot (NYSE:HD) is making an offer for building-products distributor GMS, the Wall Street Journal has reported, citing people familiar with the matter.
The exact price or timing of Home Depot’s bid could not be determined, the WSJ noted. Shares in GMS (NYSE:GMS), which have already risen in recent weeks thanks to increased speculation over a possible acquisition, soared by over 23% in premarket U.S. trading on Friday. GMS now has a market capitalization of $3.1 billion.
On Wednesday, dealmaker Brad Jacobs’ QXO (NYSE:QXO) announced it had submitted its own unsolicited proposal to purchase GMS for roughly $5 billion, or $95.20 a share in cash. QXO shares rose by more than 3% prior to the opening bell on Wall Street.
Georgia-based GMS, which supplies tools and building materials for consumers and contractors, confirmed that it had received QXO’s offer and would review it.
GMS has been at the center of rumors over a potential takeover, as firms look to take advantage of a recent need for more housing in spite of tariff-related economic uncertainty. Last year, Home Depot notched a deal to snap up SRS Distribution, a seller of professional roofing goods, for $18.25 billion, including debt, betting on increased spending by contractors and construction businesses.
The largest publicly-traded distributor of wallboard, ceiling tiles, steel framing, and interior complementary products, GMS has 45% exposure to residential properties and 55% commercial real estate, analysts at Wolfe Research led by Trevor Allinson said in a note to clients on Thursday.
The Wolfe strategists argued that, should the WSJ report prove to be accurate and Home Depot’s offer represent a premium to QXO’s bid, they would not expect a bidding war for GMS to begin. This would be due to "QXO’s commitment to price discipline" when engaging in mergers and acquisitions, the analysts said.