Home Depot to Acquire SRS Distribution

The Home Depot has announced its agreement to acquire SRS Distribution, a leading residential specialty trade distribution company across several verticals. Through this acquisition, The Home Depot's total addressable market is expected to increase by approximately $50 billion to a total of approximately $1 trillion.

SRS Distribution, with its 2,500-plus professional sales force, 760-plus branch network across 47 states, and 4,000-plus truck fleet, will enable The Home Depot to extend its offering to residential specialty trade pros while better serving renovator/remodelers.

The financial overview of the acquisition includes The Home Depot's subsidiary acquiring SRS for a total enterprise value (including net debt) of approximately $18.25 billion. The transaction is expected to be funded through cash on hand and debt. The company expects the acquisition to be dilutive to earnings-per-share (EPS) from a GAAP perspective due to amortization expense but accretive from a cash EPS perspective in the first year, post-closing, excluding synergies.

The acquisition is subject to customary closing conditions, including regulatory approvals, and is expected to be completed by the end of fiscal 2024. The company plans to access the debt capital markets to raise incremental indebtedness in support of this acquisition and intends to maintain its current credit ratings.

SRS Distribution, founded in 2008 and headquartered in McKinney, Texas, has established a differentiated growth strategy and entrepreneurial culture focused on serving customers, partnering with suppliers, and attracting industry talent. Following the acquisition, Dan Tinker, SRS's president and CEO, and his senior leadership team will continue to lead SRS and work closely with The Home Depot to deliver the best value proposition for all pro customers.

The Home Depot will conduct a conference call to discuss the information included in the news release and a slide presentation that will be made available on its investor relations webpage. J.P. Morgan Securities LLC served as the exclusive financial advisor, and Weil, Gotshal & Manges LLP served as legal counsel to The Home Depot in connection with the transaction.

The Home Depot is the world's largest home improvement specialty retailer, operating a total of 2,335 retail stores in all 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, 10 Canadian provinces, and Mexico. The company employs approximately 465,000 associates. SRS currently operates under a family of distinct local brands encompassing more than 760 locations across 47 states. Following these announcements, the company's shares moved -0.7%, and are now trading at a price of $383.25. Check out the company's full 8-K submission here.

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