(Reuters) -Home Depot will buy building materials supplier SRS Distribution in an $18.25 billion deal including debt, the top U.S. home improvement chain said, beefing up its business to professional customers as the industry tackles tepid demand.
The company and rival Lowe’s Cos have projected a slower recovery this year as U.S. consumers pause big home remodeling and renovation projects due to sticky inflation.
This has put pressure on the Do-It-Yourself (DIY) segment, which makes up about half of Home Depot’s business, and the company has sharpened its focus on “Pro-customers” such as professional builders, contractors, handymen to drive sales.
Thursday’s acquisition of SRS, Home Depot’s biggest deal, will expand its total potential market by about $50 billion to roughly $1 trillion, the company said.
SRS, a portfolio company of private equity firms Leonard Green & Partners and Berkshire Partners, serves Pro-customers including roofers, landscapers and pool contractors. It said it would operate as an independent unit within Home Depot and its leadership team will remain with the company.
“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.
The acquisition will add SRS’ network of more than 2,500 professional sales force in more than 760 locations to Home Depot’s footprint of more than 2,000 U.S. stores and distribution centers.
The deal, which would involve taking on the debt of SRS, will be funded through cash on hand and debt and is expected to close by the end of fiscal 2024.
Shares of Home Depot, which has a market value of $382.42 billion according to LSEG data, were largely unchanged before the bell.
(Reporting by Deborah Sophia in Bengaluru; Editing by Sriraj Kalluvila)
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