The Home Depot has announced its plans to acquire SRS Distribution, a residential specialty trade distribution company, in a deal valued at approximately $18.25 billion. This move will allow The Home Depot to expand its presence in the residential professional market, specifically within the roofing, landscaping, and pool contracting sectors. 

“The acquisition of SRS will help accelerate our growth with the residential professional customer,” says Ted Decker, chair, president, and CEO of The Home Depot. “SRS has built a robust and successful platform that will enable us 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.”

SRS currently operates a 760+ branch network and a fleet of over 4,000 trucks across 47 states. The company employs more than 2,500 sales professionals and specializes in providing services to professional roofers, landscapers, and pool contractors. 

Under the terms of the agreement, The Home Depot will acquire SRS for a total enterprise value of $18.25 billion, including the assumption of SRS’s net debt. The transaction is expected to be completed by the end of The Home Depot’s fiscal year 2024 and will be funded through a combination of cash on hand and debt. 

Following the completion of the acquisition, The Home Depot expects the transaction to be dilutive to earnings-per-share from a GAAP perspective due to amortization expenses. However, the company anticipates the deal will be accretive from a cash EPS perspective in the first year post-closing, excluding any potential synergies. The Home Depot also plans to maintain its current credit ratings following the transaction.

The Home Depot’s acquisition of SRS comes as the company looks to capitalize on a growing market opportunity. The home improvement retailer now believes its total addressable market is approximately $1 trillion, up from its previous estimate of $950 billion.

“We expect the acquisition to create significant shareholder value over the long term,” says Richard McPhail, Executive Vice President and CFO of The Home Depot.

To learn more about the acquisition, The Home Depot will host a conference call today at 9 a.m. ET. The company will also make a slide presentation available on its investor relations webpage at 8:30 a.m. ET. 

Founded in 2008, SRS has quickly expanded its footprint to become one of the fastest-growing building products distributors in the U.S. The company has focused on establishing a family of local brands and currently operates more than 760 locations. 

“Our team is thrilled to join The Home Depot,” says Dan Tinker, president and CEO of SRS. “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, with The Home Depot’s competitive advantages.”