On Thursday, Home Depot (NYSE:HD) announced plans to acquire SRS Distribution for $18.25 billion, marking its largest step yet towards expanding its reach to professional customers like contractors and roofers.
This move represents a part of the retail giant’s strategy to boost sales amidst a slow recovery in the home improvement sector, largely due to cautious consumer spending in the face of persistent inflation.
Because of that, Home Depot’s do-it-yourself (DIY) segment has been facing headwinds, forcing the company to rely on demand from “Pro-customers” – professional builders, contractors, handymen – to generate sales.
By acquiring SRS Distribution, which caters to a range of professional customers including roofers and landscapers, Home Depot is set to broaden its market potential by approximately $50 billion, reaching a new total of around $1 trillion.
"SRS has built a robust and successful platform that will accelerate our growth with the residential professional customer," Home Depot CEO Ted Decker said in a statement.
This deal brings together SRS's extensive professional sales team and a fleet of trucks for jobsite delivery with Home Depot's vast network of over 2,000 stores and distribution centers in the U.S.
The transaction will be carried out by a Home Depot subsidiary, using a combination of cash reserves and debt financing, with a completion target set for the end of fiscal 2024.