Home Depot buys pro supplier for $18.25B

Home Depot will buy SRS Distribution, a materials provider for professionals, in a deal valued at $18.25 billion.

It is Home Depot’s largest acquisition in its history and with it, it steps more aggressively into the fast-growing professional builder and contractor business.

SRS provides materials for professionals like roofers, landscapers and pool contractors.

Home Depot is making a big bet on a housing market that is suffering a severe lack of new homes, which has driven prices sky high.

The median sales price for new homes in the U.S. has climbed 29.4% over the past five years.

In the fourth quarter, the median sales prices totaled $417,700, according to data from the Federal Reserve Bank of St. Louis.

The U.S. housing market is coming off a deep, two-year sales slump triggered by a one-two punch of so few homes and a sharp rise in mortgage rates.

The overall decline in rates since their peak last fall has opened a tiny window for some, although a home remains out of reach for millions of Americans.

Sales of previously occupied U.S. homes rose in February from the previous month to the strongest pace in a year, with homebuyers encouraged by that modest pullback in mortgage rates.

With mortgage rates still high, millions of people are spending money on upkeep for the homes that they own, another financial driver for the Home Depot-SRS deal.

Home Depot said that when taking the deal into account, it now believes its total addressable market is about $1 trillion, an increase of about $50 billion.

“SRS has built a robust and successful platform that will accelerate our growth with the residential professional customer while presenting future opportunities with the specialty trade pro,” Home Depot CEO Ted Decker said in a statement.

SRS has a sales team of more than 2,500 and more than 760 branches across 47 states. It also has 4,000-plus truck fleet and jobsite delivery capabilities.