Home Depot (HD) announced that it has acquired specialty products distributor GMS (GMS) in a move aimed at “growing its share of wallet with professional contractors.”
The acquisition is being made through its specialty trade distribution subsidiary, SRS Distribution, which Home Depot acquired last year.
Under the terms of the agreement, SRS will acquire all outstanding shares of GMS common stock for $110.00 per share, worth approximately $5.5 billion.
Home Depot, which has a market cap of nearly $370 billion, has built its name as a retail hardware behemoth that caters to consumers working on various home-improvement projects.
However, the company is now looking to expand its business beyond the home do-it-yourselfers.
It acquired SRS Distribution in 2024 for $18 billion in 2024 – the largest acquisition in its history – in order to help it gain a share of the massive professional contractor market.
Home Depot said at the time that the deal for SRS would increase the company's total addressable market to approximately $1 trillion, an increase of approximately $50 billion.
SRS is a residential specialty trade distribution company operating across several verticals serving the professional roofer, landscaper and pool contractor segments.
Home Depot president and CEO Ted Decker said in a statement that the company had “acquired SRS as a platform for growth” and with its GMS acquisition, SRS “continues to demonstrate exceptional execution and strong performance.”
And by acquiring GMS – which stands for Gypsum Management and Supply – Home Depot is making further inroads into the professional space.
GMS is a leading distributor of specialty building products including drywall, ceilings, steel framing and other complementary products related to construction and remodeling projects in residential and commercial end markets.
SRS CEO Dan Tinker noted that SRS and GMS will “create a network of more than 1,200 locations and a fleet of more than 8,000 trucks capable of making tens of thousands of jobsite deliveries per day.”
Although Raymond James analysts said Home Depot’s “strategic rationale is sound, with added scale, category breadth, and delivery capabilities,” the firm questioned in a research note on Monday whether it paid too much.
The analysts note that Home Depot paid 11 times GMS’ Ebitda (earnings before interest, taxes, depreciation, and amortization), which “may be a point of debate among some investors.”
GMS president and CEO John Turner said in a statement that the merger with Home Depot and SRS “positions GMS to capitalize on the promising opportunities ahead and accelerate our growth.”
Meanwhile, Cowen analyst Max Rakhlenko wrote in a research note that the deal “would allow SRS to expand into additional verticals, grow market share, consolidate the industry, and meaningfully increase HD’s supply chain and distribution network.”
Home Depot’s stock is down 4.4% YTD, while shares of GMS have surged 28.6% this year.
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