Home Depot to acquire SRS distribution in $18.25B deal
Home Depot (HD) announced on Thursday that it will move to acquire SRS distribution in a deal valued at $18.25 billion. The deal will be the biggest acquisition for the home improvement retailer and is seen as an accelerator for attracting more business.
Yahoo Finance Anchors Brad Smith and Seana Smith break down the latest developments for Home Depot and what they could mean for the company moving forward.
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Editor's note: This article was written by Nicholas Jacobino
Video Transcript
BRAD SMITH: Ticker symbol HD tips and kicks off our trending tickers this morning. Home Depot announcing it's buying SRS Distribution. It's an $18.25 billion deal, its largest acquisition ever. The company is saying the deal is set to close by the end of this fiscal year. You're taking a look at shares.
They're up by about a quarter of a percent. OK. So not a ton of movement. But, again, this is the company making the acquisition. But the fact that it is in positive territory still does signal that investors perhaps do like this deal and the additive that SRS Distribution can bring to it as well. Because typically, the company making the acquisition, you might see their shares moving lower after they announce such a deal of this size.
SEANA SMITH: Yeah, that's very important to point out. And I think the reason for that is just because of why they are making this deal. The strategy behind it, it's similar to what we've heard Home Depot executives say on their most recent earnings calls. They're placing more of a focus here on their pro services side of their business.
Because right now, about half of their business is from pros, half of their business is from the DIY customer, people like myself. But they're making a bigger bet on the pro segment, pushing further there. And this acquisition here of SRS Distribution, the roof supply company, for just around $18 billion really will give them more of a footprint, greater exposure to that pro business, which they are looking to grow now for the quarters to come.
Now, in the statement, they're saying that SRS is going to enable the company to extend its offering to residential specialty trade pros while also better serving renovators and remodelers. So they're looking at it as a win actually for both categories. But really, the big beneficiary and where they will see likely, at least, in terms of the immediate reaction from the Street, where they will see this payoff at first is in that pro side of the business.
BRAD SMITH: Yeah. Look, I can ultimately really capitalize on what Home Depot's DIY to pro offering is when they finally start selling shipping containers to really satisfy some of my Pinterest board ambitions out there. Shipping container homes are amazing here. But I imagine that you're a pro DIYer as well out there.
SEANA SMITH: I wouldn't say pro. I've got some work to do but--
BRAD SMITH: Yeah. As long as you're putting effort for it, yeah.
SEANA SMITH: Yeah, I'm putting effort, slowly making progress.
BRAD SMITH: Swaggy, OK.
SEANA SMITH: Hanging things in the house, you know?
