ATLANTA, March 28,
2024 /PRNewswire/ -- The Home Depot®, the
world's largest home improvement retailer, has entered into a
definitive agreement to acquire SRS Distribution Inc. ("SRS"), a
leading residential specialty trade distribution company across
several verticals serving the professional roofer, landscaper and
pool contractor.
SRS will accelerate The Home Depot's growth with the residential
professional customer. SRS complements The Home Depot's
capabilities and will enable the company to better serve complex
project purchase occasions with the renovator/remodeler, while also
establishing The Home Depot as a leading specialty trade
distributor across multiple verticals.
With this acquisition, The Home Depot now believes its total
addressable market is approximately $1
trillion, an increase of approximately $50 billion.
"SRS is an industry leader with a proven track record of
profitable growth across verticals," said Ted Decker, chair, president, and CEO. "SRS's
ability to build leadership positions in each of its trade
verticals while generating significant revenue growth is a
testament to its strong vision, leadership, culture and execution.
SRS has built a robust and successful platform that will accelerate
our growth with the residential professional customer while
presenting future opportunities with the specialty trade pro."
Decker continued, "SRS's branch network, coupled with The Home
Depot's 2,000+ U.S. stores and distribution centers, comprehensive
product offering, and extensive pro brands, provides the
residential pro customer with more fulfillment and service options
than ever before. I look forward to welcoming the entire SRS team
to The Home Depot and capturing the exciting opportunity
ahead."
SRS's 2,500-plus professional sales force and 760-plus branch
network across 47 states, together with its 4,000-plus truck fleet
and jobsite delivery capabilities, will enable The Home Depot to
extend its offering to residential specialty trade pros while
better serving renovator/remodelers.
"Our team is thrilled to join The Home Depot," said Dan Tinker, SRS's president and CEO. "We are
looking forward to combining our differentiated assets and
capabilities, including our extensive branch network, experienced
sales team, robust trade credit offering, and order management
system, geared at serving the complex project purchase occasion,
with The Home Depot's competitive advantages. We believe this will
enable us to better serve pros and continue growing in our large
and highly fragmented market."
Tinker, as well as his senior leadership team, will continue to
lead SRS. Tinker and team will work closely with The Home Depot to
deliver the best value proposition for all pro customers.
Financial Overview
Under the terms of the merger agreement, a subsidiary of The
Home Depot will acquire SRS for a total enterprise value (including
net debt) of approximately $18.25 billion. The closing of the
acquisition is subject to customary closing conditions, including
regulatory approvals, and is expected to be completed by the end of
fiscal 2024. The transaction is expected to be funded through cash
on hand and debt.
"We plan to access the debt capital markets to raise incremental
indebtedness in support of this acquisition. We expect the
acquisition to create significant shareholder value over the long
term," said Richard McPhail,
executive vice president and CFO.
This transaction is expected 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 Company intends to maintain its current credit ratings.
Conference Call
The Home Depot will conduct a conference call today at
9 a.m. ET to discuss information
included in this news release and a slide presentation that will be
made available at 8:30 a.m. ET on its
investor relations webpage at
ir.homedepot.com/events-and-presentations. The conference call will
be available in its entirety through a webcast and replay at
ir.homedepot.com/events-and-presentations.
Advisors
J.P. Morgan Securities LLC served as
exclusive financial advisor and Weil, Gotshal & Manges LLP
served as legal counsel to The Home Depot in connection with the
transaction.
About The Home Depot
The Home Depot is the world's
largest home improvement specialty retailer. At the end of fiscal
year 2023, the company operated 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. The Home Depot's stock is traded on the New
York Stock Exchange (NYSE: HD) and is included in the Dow Jones
industrial average and Standard & Poor's 500 index.
About SRS Distribution
Founded in 2008 and
headquartered in McKinney, Texas,
SRS has grown to become one of the fastest growing building
products distributors in the United
States. Since the Company's inception, it has established a
differentiated growth strategy and entrepreneurial culture that is
focused on serving customers, partnering with suppliers, and
attracting the industry's best talent. SRS currently operates under
a family of distinct local brands encompassing more than 760
locations across 47 states. For more information,
visit www.srsdistribution.com.
Certain statements contained herein constitute
"forward-looking statements" as defined in the Private Securities
Litigation Reform Act of 1995. Forward-looking statements may
relate to, among other things, the proposed acquisition of SRS
Distribution Inc., which involves substantial risks and
uncertainties that could cause actual results to differ materially
from those expressed or implied by such statements (the "potential
acquisition"); statements about the potential benefits of the
potential acquisition; the anticipated timing of closing of the
potential acquisition (including failure to obtain necessary
regulatory approvals) and the possibility that the potential
acquisition does not close; risks related to the ability to realize
the anticipated benefits of the potential acquisition, including
the possibility that the expected benefits from the proposed
transaction will not be realized or will not be realized within the
expected time period; the risk that the businesses will not be
integrated successfully; disruption from the potential acquisition
making it more difficult to maintain business and operational
relationships; negative effects of announcing the potential
acquisition or the consummation of the potential acquisition on the
market price of our common stock, credit ratings or operating
results; significant costs associated with the potential
acquisition; unknown liabilities; the risk of litigation and/or
regulatory actions related to the potential acquisition; the demand
for our products and services, including as a result of
macroeconomic conditions; net sales growth; comparable sales; the
effects of competition; our brand and reputation; implementation of
interconnected retail, store, supply chain and technology
initiatives; inventory and in-stock positions; the state of the
economy; the state of the housing and home improvement markets; the
state of the credit markets, including mortgages, home equity
loans, and consumer credit; the impact of tariffs; issues related
to the payment methods we accept; demand for credit offerings;
management of relationships with our associates, potential
associates, suppliers and service providers; cost and availability
of labor; costs of fuel and other energy sources; events that could
disrupt our business, supply chain, technology infrastructure, or
demand for our products and services, such as international trade
disputes, natural disasters, climate change, public health issues,
cybersecurity events, geopolitical conflicts, military conflicts,
or acts of war; our ability to maintain a safe and secure store
environment; our ability to address expectations regarding
environmental, social and governance matters and meet related
goals; continuation or suspension of share repurchases; net
earnings performance; earnings per share; future dividends; capital
allocation and expenditures; liquidity; return on invested capital;
expense leverage; changes in interest rates; changes in foreign
currency exchange rates; commodity or other price inflation and
deflation; our ability to issue debt on terms and at rates
acceptable to us; the impact and expected outcome of
investigations, inquiries, claims, and litigation, including
compliance with related settlements; the challenges of operating in
international markets; the adequacy of insurance coverage; the
effect of accounting charges; the effect of adopting certain
accounting standards; the impact of legal and regulatory changes,
including changes to tax laws and regulations; store openings and
closures; guidance for fiscal 2024 and beyond; financial outlook;
and the impact of acquired companies on our organization and the
ability to recognize the anticipated benefits of any
acquisitions.
Forward-looking statements are based on currently available
information and our current assumptions, expectations and
projections about future events. You should not rely on our
forward-looking statements. These statements are not guarantees of
future performance and are subject to future events, risks and
uncertainties – many of which are beyond our control, dependent on
the actions of third parties, or currently unknown to us – as well
as potentially inaccurate assumptions that could cause actual
results to differ materially from our historical experience and our
expectations and projections. These risks and uncertainties
include, but are not limited to, those described in Part I, Item
1A, "Risk Factors," and elsewhere in our Annual Report on Form 10-K
for our fiscal year ended January 28,
2024 and also as may be described from time to time in
future reports we file with the Securities and Exchange Commission.
There also may be other factors that we cannot anticipate or that
are not described herein, generally because we do not currently
perceive them to be material. Such factors could cause results to
differ materially from our expectations. Forward-looking statements
speak only as of the date they are made, and we do not undertake to
update these statements other than as required by law. You are
advised, however, to review any further disclosures we make on
related subjects in our filings with the Securities and Exchange
Commission and in our other public statements.
Forward-looking statements speak only as of the date they are
made, and we do not undertake to update these statements other than
as required by law. You are advised, however, to review any further
disclosures we make on related subjects in our filings with the
Securities and Exchange Commission and in our other public
statements.
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SOURCE The Home Depot