Home Depot officially sealed its $5.5 billion buyout of building material distributor GMS Inc., solidifying its drive to provide professional contractors in North America.
The Atlanta-based home improvement giant announced that the deal was closed on Thursday, Sept. 4, as a significant move toward broadening its portfolio of professional services.
The buy was originally announced in June and has been completed through Home Depot’s subsidiary SRS Distribution Inc., a roofing distributor the company bought earlier this year in an enormous $18 billion transaction. With both GMS and SRS in its fold, Home Depot is reinforcing its plan to better serve professionals in construction, remodeling, and large-building projects.
The company noted in its statement that the addition of GMS will provide additional fulfillment and service options designed specifically for contractors. Home Depot president and CEO Edward “Ted” Decker noted the long-term strategy, saying the acquisition is an expression of the company’s dedication to “serve the Pro across their entire project.”
What is GMS?
Gypsum Management & Supply, widely referred to as GMS, is a top specialty building material distributor. Drywall, ceilings, steel framing, and insulation are its main products, as well as offering a wide array of solutions for both residential and commercial building. GMS was established in 1971 and has expanded to have over 300 distribution centers in the United States and Canada, as stated on its website.
The firm has served as a major provider of high-demand building products to contractors over the past decades. Although the financial figures confirm that Home Depot believes highly in this acquisition, it is still unclear if any of GMS’s distribution centers will be closed down under its new ownership.
Scaling up Home Depot’s professional contractor emphasis
For Home Depot, the GMS acquisition is another aggressive move toward tapping into a greater portion of the professional contractor segment, which Home Depot describes as “growing its share of wallet.” Pros, widely referred to as “Pros” by the trade, are a vital segment of Home Depot’s business model. These contractors are the source of bulk purchases, regular stock runs, and specialty projects that go from intricate commercial construction to minor remodels and repairs.
When Home Depot purchased SRS Distribution a few months back, the company was adamant that SRS would remain independent while it extended its scope to serve Home Depot’s pro-centric business model. The acquisition of GMS fits right into that strategy, providing Home Depot with an opportunity to develop differentiated products that span the lifecycle of a contractor’s project.
With the addition of GMS in its portfolio, Home Depot now acquires deeper industry expertise in specialty building materials while strengthening its position as a one-stop solution for professional contractors. The company mentioned that GMS and SRS will continue to concentrate on delivering strong supply chains and service capabilities designed to meet contractors’ needs at scale.
Terms of the deal
As part of the takeover, Home Depot, along with its subsidiary Gold Acquisition Sub, Inc., paid cash at $110 per share for GMS. The action makes GMS a direct subsidiary of SRS and an indirect, wholly owned subsidiary of Home Depot.
The transaction highlights Home Depot’s aggressive expansion strategy and its emphasis on strengthening its professional contractor segment, which has become a keystone of its long-term business plan. While the retailer still remains focused on serving everyday customers looking for home improvement products, its strongly strengthened push toward pro contractors reflects a broader shift in its business model.
Having GMS on board officially, Home Depot has an even better position to lead both residential and commercial building supply markets throughout North America. As competition heats up in the construction and remodeling industry, the $5.5 billion acquisition marks the company’s pledge to expand services for the professionals driving its growth.
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