Home Depot has announced its intention to acquire GMS, a distributor of specialty building products, for a total of $4.3 billion. This represents the home improvement giant’s second significant acquisition in just over a year, highlighting its strategic efforts to expand into the building and materials supply sector.
This acquisition comes at a time when sales growth spurred by the pandemic has started to taper off, prompting Home Depot to sharpen its focus on serving professional builders.
GMS Inc., based in Tucker, Georgia, specializes in distributing building materials such as drywall, steel framing, and other essentials used in both residential and commercial construction projects. The acquisition will be orchestrated through SRS Distribution Inc., a subsidiary of Home Depot that was acquired last year. SRS will initiate a cash tender offer to purchase all shares of GMS at $110 per share, bringing the overall value of the transaction to approximately $4.3 billion. When accounting for debt, the total value of the deal escalates to around $5.5 billion.
SRS Distribution, which Home Depot acquired for over $18 billion including debt, supplies materials to professionals in industries such as roofing, landscaping, and pool construction.
Dan Tinker, CEO of SRS, stated, “By merging GMS with SRS, we are setting the stage for unparalleled service and fulfillment options for our residential and commercial professional customers.” He added that the combined entity would operate a network of over 1,200 locations and a fleet exceeding 8,000 trucks capable of making countless jobsite deliveries daily.
Based in Atlanta, Home Depot moved swiftly to secure the acquisition of GMS, strategically placing its bid just two weeks after the company QXO proposed a $5 billion offer, as detailed in regulatory filings. Billionaire Brad Jacobs, the CEO of QXO, has been actively acquiring companies within the building supply sector, including a recent $11 billion purchase of Beacon Roofing Supply in April.
The transaction between GMS and Home Depot is anticipated to conclude by the end of fiscal 2025. Following the acquisition announcement, GMS shares surged nearly 12% at the market’s opening, while Home Depot shares saw a slight dip.