Home Depot to retake control of HD Supply Holdings in $8 billion deal
Home Depot aims to expand footprint in the $55B marketplace for maintenance, repair and operations, or MRO, products
Home Depot said it plans to buy industrial wholesale giant HD Supply Holdings for about $8 billion, setting itself up to regain control over the industrial material wholesaler after spinning it off over a decade ago.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| HD | THE HOME DEPOT INC. | 420.00 | +9.61 | +2.34% |
| HDS | NO DATA AVAILABLE | - | - | - |
The hardware store chain said it will pay $56 per share in cash for HD Supply, which sells construction materials, appliances, cleaning supplies and other industrial goods for use in hospitality businesses and multifamily properties such as apartment buildings.
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Home Depot contends the tie-up will help expand its footprint in the $55 billion marketplace for maintenance, repair and operations, or MRO, products. The deal is expected to close during the fourth quarter of Home Depot’s fiscal year, which ends Jan. 31.
“HD Supply complements our existing MRO business with a robust product offering and value-added service capabilities, an experienced salesforce that enhances the strong team we have in place,” Home Depot CEO Craig Menear said in a statement.
HD Supply’s stock price soared more than 24 percent on news of the deal to $55.73 in early trading Monday, while Home Depot shares jumped as much as about 1 percent to $279.89.
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Home Depot said it will use cash on hand and debt to finance the purchase of HD Supply, which has roughly 300,000 customers and about 44 distribution centers across 25 US states and two Canadian provinces. Both companies are headquartered in Atlanta.
“We’re thrilled that our associates are joining the Home Depot team and that our customers will be able to benefit from a broader product assortment, expanded delivery options and enhanced services nationally,” HD Supply CEO Joe DeAngelo said in a statement.
The deal was announced ahead of Home Depot’s third-quarter earnings report on Tuesday. Wall Street analysts expect the chain to post profits of about $3.05 a share on revenues of nearly $32 billion, which would reflect growth of about 20 percent and 17 percent from the year-earlier quarter, respectively, according to Bloomberg data.