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In the world of residential building materials, merger deals do not get bigger or more impactful to the industry.

On March 28, SRS Distribution, a nationwide roofing and building supply company with 760 branch locations representing more than 100 local suppliers, agreed to be acquired by Home Depot, the nation’s largest big-box retailer, for $18.25 billion.

In a press release, Home Depot said the acquisition of SRS made sense in two ways. It adds value for their existing base remodeling and renovation pros by giving them access to more product. At the same time, the Home Depot gains billions in new annual business from specialty contractors who do not buy from Home Depot.

“SRS’s branch network, coupled with The Home Depot’s 2,000-plus U.S. stores and distribution centers, comprehensive product offering, and extensive pro brands, provides the residential pro customer with more fulfillment and service options than ever before,” said Home Depot CEO Ted Decker. “I look forward to welcoming the entire SRS team to The Home Depot and capturing the exciting opportunity ahead.”

SRS was formed in 2008 by Ron Ross and AEA Investors with an initial acquisition of Suncoast Roofers Supply. Today SRS operates in 47 states, employs 2,500 salespeople and runs a fleet of 4,000 delivery trucks. Home Depot, with its 2,000 retail stores nationwide, greatly expands its footprint, giving it a big logistical boost in its deliveries to its base of pros who tend to be involved in larger more complex renovation and remodeling projects.

The deal is expected to close by end of 2024, pending regulatory approvals. The deal is a real milestone for the industry. Well known pro-only brands like GAF and CertainTeed will now be available to Home Depot’s pro customers via SRS branches. At the same time, accuracy and timeliness of product deliveries from Home Depot will likely improve.

The deal also represents a continuation of outside investors being a force for change in the residential construction industry. Ron Ross and AEA sold Suncoast (SRS) to Berkshire Partners in 2013 for approximately $3.5 billion. Then in 2018, SRS was purchased by three groups: Leonard Green & Partners; Berkshire Partners and members of SRS’s management team. Each step of the way SRS continued expanding its footprint with acquisitions and new greenfield locations.

“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,” said Dan Tinker, president and CEO of SRS. “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.”

Home Depot said it intends to operate SRS as an independent unit within the company and to keep its leadership team in place.

It remains an open question whether rival Lowe’s will follow suit with a similar acquisition to bolster its position with its pro customers. There are only so many large building product distribution firms with the kind of scale SRS brings to Home Depot. QR

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