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Home Depot Buys Professional Contractor Supplier in Deal Valued at Approximately $18.25 Billion

McKINNEY, Texas– Home Depot will buy SRS Distribution, a professional materials supplier, in a deal valued at approximately $18.25 billion.

It is Home Depot’s largest acquisition in its history, and with it, it more aggressively enters the fast-growing professional builders and contractors business.

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

Home Depot is making a big bet on a housing market that is suffering from a severe lack of new homes, which has sent prices soaring. The average sales price of new homes in the United States has increased 29.4% in the last five years. In the fourth quarter, average sales prices totaled $417,700, according to data from the Federal Reserve Bank of St. Louis.

The U.S. housing market is emerging from a deep, two-year sales slump, caused by a double whammy of so few homes and a sharp rise in mortgage rates. The overall drop in rates since their peak last fall has opened a small 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 at the strongest pace in a year, encouraged by homebuyers by that modest decline in mortgage rates.

As mortgage rates remain high, millions of people are spending money on maintaining their homes, another financial driver for the Home Depot-SRS deal.

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

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

SRS has a sales force of more than 2,500 and more than 760 branches in 47 states. It also has a fleet of more than 4,000 trucks and on-site delivery capabilities.

“We look forward to combining our differentiated assets and capabilities, including our extensive branch network, our experienced sales team, our robust trade credit offering and our order management system, aimed at serving the complex project purchasing occasion, with the advantages competitive prices of The Home Depot. SRS CEO Dan Tinker said. “We believe this will allow us to better serve professionals and continue to grow in our large and highly fragmented market.”

The deal is expected to close by the end of fiscal 2024.

Copyright © 2024 by The Associated Press. All rights reserved.

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