As part of The Home Depot’s latest efforts to tap into what it calls an underserved professional customer market segment, the home improvement retailer and distributor announced it will acquire building product distributor SRS Distribution in a deal valued at $18.25 billion. The transaction is expected to close by the end of fiscal 2024 and marks the latest major shakeup in the building materials pro market.

SRS is a portfolio company of private equity firm Berkshire Partners.

Under the terms of the agreement, SRS Distribution — ranked No. 5 on MDM’s 2023 Top Building Materials/Construction Distributors List — will operate as an independent business unit within The Home Depot. It will focus on accelerating growth in the Pro market — which is largely made up of contractors typically served by distributors.

This proposed transaction will expand SRS’ reach into numerous new product categories and to new customers, and give the McKinney, TX-based distributor access to The Home Depot’s platform.  The SRS senior leadership team will remain with the company, including SRS President and CEO Dan Tinker, who will continue to lead SRS operations under this new structure, reporting to The Home Depot CEO Ted Decker.

“We are proud to be combining with The Home Depot to continue our growth journey with the additional resources and capabilities they will put behind us,” Tinker said in a March 28 news release. “We set out to find the optimal strategic outcome for the business, and we strongly believe we have achieved just that. With this combination, the future has never been brighter for our supplier partners, our Pro customers, and our team.”

The Home Depot Eyes Pro Customer Segment

Home Depot executives have been vocal about their plans to tap into a segment of their professional (Pro) customers which work on complex projects which require multiple supplies across product categories. Last year, Home Depot officials said simple projects — those that can be served by store assets — made up the bulk of Home Depot’s Pro customer sales.

Read more about how Home Depot plans to better serve the contractor market on MDM Premium. 

Their plan, which they say will be potentially “transformative” to its business, is to tap into the complex Pro customer, traditionally served by wholesale distributors. Despite Pro sales leveling out with do-it-yourself customer segment sales and backlogs lowering in the fourth quarter of 2023, The Home Depot says sales remain stable and elevated relative to historical norms. This year, the retail giant will open four new distribution centers to better serve these customers.

The proposed acquisition of SRS will “clear a pathway for accelerated growth with the residential and commercial professional customer by expanding The Home Depot’s Pro capabilities, combining online, retail, and wholesale,” company officials said.

Earlier this year, SRS opened a record number of greenfield locations (22) in its original building product division.

“SRS’ branch network, coupled with The Home Depot’s 2,000+ U.S. stores and distribution centers and comprehensive product offering provides the residential and commercial Pro customer with more fulfillment and service options than ever before,” said Ted Decker, Chair, President and CEO of The Home Depot.

In 2020, Home Depot re-acquired multifamily facility MRO supplies distributor HD Supply to expand its reach into the residential market.

Check out how Home Depot integrated HD Supply into its business on MDM Premium.