US retailer Home Depot has agreed to acquire building products distributor GMS for $5.5bn, strengthening its position in the professional contractor market. GMS, which operates over 300 distribution hubs across North America, will join Home Depot's SRS Distribution unit, acquired last year for $18.25bn.
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The deal values GMS shares at $110 each, a 36% premium over their price before a rival bid. The acquisition boosts Home Depot's commercial reach with a combined network of more than 1,200 locations and 8,000 delivery trucks.
This move outmanoeuvres QXO, the acquisition vehicle of billionaire Brad Jacobs, which had made an unsolicited $5bn offer earlier in June. Jacobs, backed by investors including Jared Kushner's Affinity Partners, had threatened to take the bid directly to shareholders.
Under the agreement, GMS would pay a $147.5m break fee if it accepts another offer, while Home Depot owes $230m if regulatory approval fails. GMS shares rose 11.7% to $108.75 following the announcement.
Home Depot is shifting away from its DIY focus as higher interest rates weaken consumer renovation demand. The acquisition underscores its aim to consolidate the fragmented building supply sector and expand its presence in the commercial construction space.
Source: www.ft.com