ATLANTA, GEORGIA – Home improvement giant Home Depot has made a significant move by acquiring SRS Distribution, a supplier of materials for professionals, in a record-breaking deal valued at about $18.25 billion, including debt. This acquisition marks Home Depot’s largest in its history and signals a bold step into the rapidly growing professional builder and contractor market. As retail sales, which surged during the pandemic, have started to decline, Home Depot is shifting its focus towards catering to the professional market segment for sales growth.
SRS Distribution specializes in providing materials to professionals such as roofers, landscapers, and pool contractors, making it a strategic fit for Home Depot as it seeks to capitalize on the booming demand in the housing market. With the housing market currently facing a shortage of new homes, prices have skyrocketed, with the median sales price of new homes in the U.S. rising by 29.4% over the past five years to reach $417,700 in the fourth quarter, according to data from the Federal Reserve Bank of St. Louis.
Following a two-year sales slump in the U.S. housing market caused by a combination of low inventory and a sharp rise in mortgage rates, there has been a recent uptick in sales, driven by a slight decrease in mortgage rates. However, with mortgage rates still relatively high, many Americans are focusing on maintaining and upgrading their existing homes, which creates a favorable environment for the Home Depot-SRS partnership.
The acquisition will expand Home Depot’s total addressable market to approximately $1 trillion, an increase of around $50 billion. Home Depot’s CEO, Ted Decker, expressed enthusiasm about the deal, stating that SRS’s successful platform will boost growth with residential professional customers and open up future opportunities within the specialty trade pro segment. SRS, headquartered in McKinney, Texas, boasts a sales team of over 2,500 and operates more than 760 branches across 47 states, along with a fleet of over 4,000 trucks and job site delivery capabilities.
CEO of SRS Distribution, Dan Tinker, highlighted the synergies between the two companies, emphasizing the combined strengths in branch network, sales team, trade credit offering, and order management system that will better serve professionals and drive growth in the market. Tinker and his senior management team will continue to lead SRS, with the deal expected to be finalized by the end of fiscal 2024, solidifying Home Depot’s position in the professional builder and contractor business.