The Home Depot to acquire SRS
The Home Depot has entered into a definitive agreement to acquire SRS Distribution Inc., a residential specialty trade distribution company across several verticals serving the professional roofer, landscaper and pool contractor.
SRS will accelerate The Home Depot’s growth with the residential professional customer. SRS complements The Home Depot’s capabilities and will enable the company to better serve complex project purchase occasions with the renovator/remodeler.
With this acquisition, The Home Depot now believes its total addressable market is approximately $1 trillion, an increase of approximately $50 billion.
“SRS is an industry leader with a proven track record of profitable growth across verticals,” said Ted Decker, chair, president, and CEO. “SRS’s ability to build leadership positions in each of its trade verticals while generating significant revenue growth is a testament to its strong vision, leadership, culture and execution. 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.
“SRS’s branch network, coupled with The Home Depot’s 2,000-plus U.S. stores and distribution centers, comprehensive product offering, and extensive pro brands, provides the residential pro customer with more fulfillment and service options than ever before,” Decker added.
SRS’s 2,500-plus professional sales force and 760-plus branch network across 47 states, together with its 4,000-plus truck fleet and jobsite delivery capabilities, will enable The Home Depot to extend its offering to residential specialty trade pros while better serving renovator/remodelers.
“Our team is thrilled to join The Home Depot,” said Dan Tinker, SRS’s president and CEO. “We are looking forward to combining our 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, with The Home Depot’s competitive advantages. We believe this will enable us to better serve pros and continue growing in our large and highly fragmented market.”
Tinker, as well as his senior leadership team, will continue to lead SRS, and will work closely with The Home Depot to deliver the best value proposition for all pro customers.
“This acquisition gives us an entry point into becoming a leading multi-trade distributor to better serve the needs of specialty trade customers and a new avenue by which to serve the complex project,” Decker said during a March 28 press conference to discuss the acquisition.
“This is all about accelerating sales growth with our customers. Full stop,” said Richard McPhail, executive vice president and CFO of The Home Depot. “Our primary objective is to grow sales and earnings as fast as possible and generate exceptional returns on capital, and SRS accelerates our ability to do both.”
Financial overview
Under the terms of the merger agreement, a subsidiary of The Home Depot will acquire SRS for a total enterprise value (including net debt) of approximately $18.25 billion. The closing of the acquisition is subject to customary closing conditions, including regulatory approvals, and is expected to be completed by the end of fiscal 2024. The transaction is expected to be funded through cash on hand and debt.
“We plan to access the debt capital markets to raise incremental indebtedness in support of this acquisition. We expect the acquisition to create significant shareholder value over the long term,” said McPhail.
