Home Depot makes a major pro contractor play by acquiring GMS for $5.5B

Home Depot (NYSE:HD) struck a deal to acquire GMS Inc. (NYSE:GMS) through its specialty trade distribution subsidiary, SRS Distribution. Under the terms of the agreement, a unit of SRS will commence a tender offer to acquire all outstanding shares of GMS (NYSE:GMS) common stock for $110.00 per share, for a total enterprise value (including net debt) of approximately $5.5 billion. The $110.00 per-share consideration represents a premium of approximately 36% to GMS’ (GMS) unaffected share price as of June 18.

The home improvement retailer beat out building products distributor QXO (QXO) for GMS (GMS), which made an unsolicited all-cash offer of $95.20 per share, valuing the company at approximately $5 billion including debt.

The acquisition of GMS (GMS) is anticipated to accelerate SRS’s vision of becoming a leading, multicategory building materials distributor, adding a new vertical that is adjacent to its existing business.

“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,” noted GMS (GMS) Chair John Gavin. ” Not only does this outcome deliver significant and certain value to our shareholders, but it also has the added benefit of bringing GMS together with The Home Depot and SRS, where we are confident our employees will flourish, our customers and suppliers will benefit from our increased offerings and resources, and we will honor the legacy of our founders who made all of this possible,” he added.

Home Depot (NYSE:HD) said the combination of GMS and SRS will provide the residential and commercial professional contractor customer with more fulfillment and service options than ever before. Together, the two new Home Depot (HD) add-ons are expected to 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 job site deliveries per day.

Shares of GMS (GMS) were up 11.0% to $108.00 at 8:17 a.m. Home Depot (HD) shed 0.2% and QXO (QXO) rose 0.6%. The development is also relevant to Lowe’s Companies (LOW).