Home Depot (HD) is buying GMS (GMS), a building products distributor, for $4.3 billion as the home improvement retailer chases sales from contractors and professional builders.
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GMS stock is up more than 11% to a 52-week high on news that it is being acquired. The deal is being executed by Home Depot subsidiary SRS Distribution, which will purchase all outstanding shares of GMS for $110 each. The acquisition adds up to about $4.3 billion and is expected to close in early 2026.
The purchase of GMS comes as Home Depot chases growth and focuses more on sales from contractors and professional builders rather than homeowners undertaking renovations and repairs. Today, Home Depot’s target customers are electricians, roofers, and dry wall installers rather than do-it-yourself (DIY) consumers.
Bidding War
Home Depot’s purchase ends a bidding war that had broken out for GMS. Billionaire Brad Jacobs., who owns building-products distributor QXO, had offered $5 billion in cash to acquire GMS and said he would press forward with a hostile takeover if the company’s management rejected his offer.
Home Depot acquired SRS Distribution, the subsidiary that’s now buying GMS, in 2024 for $18.25 billion, which was the biggest acquisition in the company’s history. SRS sells supplies to professionals in the landscaping, roofing, and pool businesses, and has bought smaller suppliers as it’s grown over the years. HD stock has declined 5% this year.
Is HD Stock a Buy?
The stock of Home Depot has a consensus Strong Buy rating among 24 Wall Street analysts. That rating is based on 19 Buy and five Hold recommendations issued in the last three months. The average HD price target of $428.30 implies 16.75% upside from current levels.
