Latest news with #DanTinker
Yahoo
5 days ago
- Business
- Yahoo
Home Depot goes after pro market with $4.3B acquisition
This story was originally published on Retail Dive. To receive daily news and insights, subscribe to our free daily Retail Dive newsletter. The Home Depot is again bolstering its offering for pro customers. The home improvement company has struck a deal for its subsidiary SRS Distribution to acquire specialty building products distributor GMS Inc, subject to customary closing conditions. A subsidiary of SRS will purchase all outstanding shares of GMS' common stock for $110 per share for a total equity value of about $4.3 billion. 'Acquiring GMS represents a next logical step in [Home Depot's] deep dig into the Pro distribution channel,' Wells Fargo analysts led by Zachary Fadem said in emailed comments Monday. The deal, which is expected to close by the end of this fiscal year, will be funded through cash on hand and debt. Including debt, the transaction is valued at about $5.5 billion, the companies announced Monday. "The combination of GMS and SRS will provide the residential and commercial Pro customer with more fulfillment and service options than ever before,' Dan Tinker, CEO of SRS, said in a statement. 'Together, we'll 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.' This move is expected to accelerate SRS's goals of becoming a multi-category building distributor. GMS' business focuses on specialty building materials, including drywall, ceilings, steel frames and other products for residential and commercial construction and remodeling projects. It will also expand SRS' distribution footprint in the U.S. and Canada, the company said in its announcement. This also strengthens Home Depot's position among pro customers. The home improvement retailer last year acquired SRS — which serves roofing, landscaping and pool contractors — for about $18.25 billion. At the time, Home Depot said the acquisition expanded its total addressable market by $50 billion to about $1 trillion. "The Home Depot acquired SRS as a platform for growth, and SRS continues to demonstrate exceptional execution and strong performance," Home Depot CEO Ted Decker said in a statement. "In our first year of working together, we've captured significant synergies, including cross-selling new products and service offerings to both Home Depot and SRS customers, advancing Home Depot's enterprise trade credit program through the SRS platform, and many other initiatives designed to drive the customer value proposition and operational efficiency. This success gives us confidence that the addition of GMS to the SRS platform will allow us to create even greater value for our customers." Home Depot and rival Lowe's have been working to win over the pro customer segment in recent years. Earlier this year, Home Depot appointed long-time company veteran Michael Rowe as its executive vice president of pro, tasked with growing the retailer's pro business. To better serve those customers, Home Depot also opened four distribution centers stocked with big and bulky products, including lumber, insulation and roofing shingles. Its agreement for SRS to acquire GMS, however, comes at a time when home improvement retailers feel the pressures of a slowing housing market. During the first quarter of this year, home sales declined 3.1% year over year, according to research from GlobalData. For Home Depot, the retailer reported Q1 net sales grew 9.4% year over year to $39.9 billion, while comparable sales fell 0.3%. Billy Bastek, executive vice president of merchandising, said on a call in May that pro comp sales were positive during the quarter and outpaced DIY customer sales. Recommended Reading Beyond Inc. acquires Zulily brand for $4.5M Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
6 days ago
- Business
- Yahoo
Home Depot to buy building products firm GMS for $5.5bn
US home improvement retailer The Home Depot has agreed to purchase building products distributor GMS for $5.5bn including net debt, expanding its offerings to professional contractors. GMS has more than 300 construction supply locations across North America. It will be integrated into Home Depot's speciality trade distribution subsidiary SRS Distribution. The strategic move is part of The Home Depot's growth strategy and aims to support contractors' in projects ranging from large-scale constructions to smaller renovations. In 2024, The Home Depot's acquisition of SRS marked its entry into speciality trade distribution, covering sectors such as roofing, landscaping and pool supplies. The addition of GMS is set to further SRS's goal to become a top multi-category building materials distributor. GMS's expertise in distributing products such as drywall, ceilings and steel framing will complement SRS's existing operations and extend its distribution network across the US and Canada. The leadership of GMS, including John C Turner and his senior team, will continue to manage the company under the SRS umbrella. SRS CEO Dan Tinker stated: "The combination of GMS and SRS will provide the residential and commercial pro customer with more fulfilment and service options than ever before. Together, we'll 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.' SRS will initiate a cash tender offer to acquire all GMS common stock for $110 per share, valuing the equity at $4.3bn. The transaction will be financed through existing cash and debt but is not expected to impact The Home Depot's target of a two times leverage ratio by the end of fiscal 2026. The acquisition is projected to increase adjusted earnings per share in the first year post-closing, not including synergies. GMS chair John Gavin stated: '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. '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 honour the legacy of our founders who made all of this possible.' BofA Securities and JP Morgan Securities acted as financial advisors for this transaction, while Weil, Gotshal & Manges provided legal counsel to The Home Depot. "Home Depot to buy building products firm GMS for $5.5bn" was originally created and published by Retail Insight Network, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
CNBC
6 days ago
- Business
- CNBC
Home Depot makes another bet on pro customers. Why Jim Cramer has reservations about the move
Home Depot is going back to the acquisition well in its bid to capture more spending dollars from professional contractors. The news The home improvement retailer announced Monday that it is acquiring GMS, a building materials distributor that specializes in products such as drywall, steel studs and insulation . Under the agreement, Home Depot's subsidiary SRS Distribution will buy all of GMS' stock for $110 per share for a total of $4.3 billion. Including net debt, the deal gives GMS an enterprise valuation of $5.5 billion. Shares of Home Depot were fell by roughly 0.5% Monday. GMS shares jumped nearly 12% on the news to $108.70, getting close to the deal price. Home Depot said the transaction, which is expected to close by the end of its ongoing fiscal 2025, will be funded using cash on hand and debt. Nevertheless, Home Depot said it still intends to reduce its leverage ratio — as measured by debt to EBITDAR — to 2 by the end of fiscal 2026. EBITDAR is short for earnings before interest, taxes, depreciation, amortization and restructuring or rent costs. Home Depot took on debt to fund last year's acquisition of SRS, and accordingly, the company paused stock buybacks to make paying down debt a higher priority. Home Depot said GMS will be a positive contributor to adjusted earnings per share growth in the first year post-closing. Big picture Home Depot beat out billionaire Brad Jacob's QXO in the quest to acquire GMS. It was a little more than a week ago that Home Depot had reportedly put in a bid to buy its fellow Georgia-based company following an unsolicited $5 billion cash proposal by QXO. There was speculation of a forthcoming bidding war until QXO said it would not be raising its offer. QXO acquired Beacon Roofing Supply in April. Owning GMS pushes Home Depot further into the world of professional customers following the purchase of SRS last year, in an even larger transaction valued at $18.25 billion including debt. Home Depot's decision to buy SRS — which specializes in the pool, landscaping, and roofing space — was considered an aggressive move to gain market share among specialized contractors. On its last earnings, Home Depot executives said they were "super pleased with SRS's performance." It also comes at a time when Home Depot's business serving do-it-yourself customers has been weighed down by subdued activity in the housing market. GMS has over 300 distribution centers in the U.S. and Canada, expanding SRS's ability to service more professional contractors and provide more fulfillment options. The combined GMS and SRS network will have more than 1,200 locations and over 8,000 trucks "capable of making tens of thousands of jobsite deliveries per day," SRS CEO Dan Tinker said in a press release Monday. When Home Depot's interest in GMS first surfaced in the media, RBC analysts said the then-rumored deal could be seen "slightly negatively" as it furthers gross margin dilution and delay the restart of share repurchases. Bottom line Home Depot's increasing focus on the pro customer makes a lot of sense. However, the timing of the GMS deal is questionable in Jim Cramer's mind. "I did not favor this deal," Jim said during Monday's Morning Meeting. "I want Home Depot to buy back its stock," he said. With shares struggling to find their footing due to the subdued housing market, Jim said, "I think the stock is very, very cheap." To be sure, the Club recognizes that Home Depot said buying GMS doesn't change its plans to return to its targeted leverage ratio of 2 by the end of next fiscal year – something executives have said they want to do before starting up buybacks. But Portfolio Analyst Zev Fima said it is fair to wonder whether the company could be more aggressive in paying down debt given its timeline is unchanged despite using debt to fund the GMS deal. Fima said another option would be to simply restart buybacks before the targeted leverage ratio is reached and before mortgage rates retreat — the reason is that both of those are catalysts that we would expect to boost the currently depressed share price. We think it would be better to fire up the buyback again ahead of that. In any case, we still see Home Depot as an eventual winner once rates fall and activity in the housing market picks up. That thesis has taken longer to play out than expected when we initiated a position in Home Depot in September 2024 , but we see it as being delayed — not destroyed. (Jim Cramer's Charitable Trust is long HD. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Yahoo
7 days ago
- Business
- Yahoo
Home Depot Wins Bidding War, Will Acquire GMS for $4.3B
Home Depot has won a bidding war for GMS, striking a deal to buy the building-products distributor for $4.3 billion, or $5.5 billion including debt. A subsidiary of Home Depot's SRS Distribution unit "will commence a cash tender offer to purchase all outstanding shares of GMS common stock for $110 per share," the home-improvement giant said. Home Depot outbid QXO's recent $95.20-per-share cash offer for Depot (HD) has won a bidding war for GMS (GMS), striking a deal to buy the building-products distributor for $4.3 billion, or $5.5 billion including debt. A subsidiary of Home Depot's SRS Distribution unit "will commence a cash tender offer to purchase all outstanding shares of GMS common stock for $110 per share," the home-improvement giant said. The company outbid QXO's (QXO) recent $95.20-per-share case offer for the Tucker, Ga.-based firm. "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," GMS Chair John Gavin said. GMS shares soared 12% in intraday trading to $108.79 and have risen almost 30% this year. Home Depot shares slipped 0.8%, while QXO stock is up 3%. "The combination of GMS and SRS will provide the residential and commercial Pro customer with more fulfillment and service options than ever before," SRS CEO said Dan Tinker said. "Together, we'll 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." Read the original article on Investopedia
