Home Depot pays $18.25 billion to expand contractor sales
The Home Depot said Thursday that it will pay $18.25 billion for Texas-based SRS Distribution to expand its business with the professional residential builder and remodeler.
SRS is a leading construction materials distributor with a sales force of more than 2,500 working from 760 branches across 47 states. It supplies to the home building and remodeling trade and serves professional roofers, landscapers and pool contractors. It has a truck fleet of more than 4,000 vehicles that make job site deliveries.
While Home Depot, the largest home improvement specialty retailer, is known for serving homeowner DIY customers, it’s been working to build up its business with professional home builders and remodelers.
Combining SRS with Home Depot’s more than 2,000 stores and distribution centers, creates “more fulfillment and service options than ever before” for Home Depot’s residential contractor customers, said Ted Decker, Home Depot CEO, in a statement.
With the acquisition of SRS, Home Depot estimates its total addressable market is about $1 trillion, an increase of about $50 billion with SRS’ categories and reach.
Home Depot has been revamping its distribution to better serve its pro customers for several years and started that effort in North Texas in 2020 with a new 800,000-square-foot flatbed truck distribution center in Dallas. At that time, Home Depot said while only 4% of the company’s customers are people who make a living remodeling and maintaining the residential market, they represented 45% of Home Depot’s annual sales.
“Our team is thrilled to join The Home Depot,” said Dan Tinker, SRS’ CEO who plans to stay on with his senior leadership team. The acquisition is expected to be completed by yearend pending regulatory approvals. Home Depot said it’s funding the transaction with cash and debt.
According to the company’s
website, SRS has been in business since 2008 and was sold to Los Angeles-based private equity firm Leonard Green & Partners from Berkshire Partners in 2018. Boston-based Berkshire Partners first invested in SRS in 2013.
SRS brings Home Depot “differentiated assets and capabilities, including our extensive branch network, experienced sales team, robust trade credit offering, and order management system, geared at serving the complex project purchase occasion,” Tinker said.
SRS gains from Home Depot’s competitive advantages, he said. SRS will be able to continue growing in what he called a “large and highly fragmented market.”
SRS has been growing through acquisitions of small building materials distributors. It’s been a consolidator in the industry and purchased 86 smaller companies since it was founded in 2008, according to its website.