Home Depot's specialty distribution subsidiary SRS Distribution agreed Monday to acquire building materials distributor GMS Inc. for $4.3 billion, outbidding a rival offer and expanding the retail giant's reach into professional contractor markets.
The $110-per-share cash deal represents a 36% premium to GMS' stock price before any bidding began and creates a distribution network of more than 1,200 locations with over 8,000 delivery trucks. The acquisition, valued at $5.5 billion including debt, strengthens Home Depot's strategy to capture more business from professional contractors who typically generate higher revenue per transaction than do-it-yourself customers.
The agreement caps a two-week bidding contest that began when QXO, led by billionaire Brad Jacobs, offered approximately $5 billion for GMS and threatened a hostile takeover12. GMS shares jumped 27% on news of competing offers, closing above QXO's initial bid as investors anticipated an auction1.
"Following careful consideration of The Home Depot's proposal, along with other potential opportunities for the Company, our Board determined that this transaction is in the best interests of GMS and all of our shareholders," said John J. Gavin, GMS board chair3.
The deal accelerates Home Depot's push into specialty trade distribution following its $18.25 billion acquisition of SRS last year12. Georgia-based GMS distributes wallboard, ceilings, steel framing and related construction products through more than 320 distribution centers serving residential and commercial contractors34.
"The Home Depot acquired SRS as a platform for growth, and SRS continues to demonstrate exceptional execution and strong performance," said Ted Decker, Home Depot's chair, president and CEO5. He cited cross-selling successes and operational synergies from the SRS integration as confidence builders for the GMS addition.
SRS CEO Dan Tinker said the combined operation will make "tens of thousands of jobsite deliveries per day" and provide contractors with expanded fulfillment options56.
Home improvement retailers have pursued professional contractor business as consumer spending on large renovation projects has declined1. Home Depot rival Lowe's acquired Artisan Design for $1.33 billion in April, while the professional market segment typically offers more stable revenue streams than consumer sales1.
The transaction requires regulatory approval and is expected to close by the end of fiscal 20252. GMS CEO John C. Turner Jr. and his leadership team will continue operating the company within SRS34.
