Home Depot enters pact for SRS Distribution to acquire GMS for $110 per share

The Home Depot (HD) has entered into a definitive agreement for its specialty trade distribution subsidiary, SRS Distribution, to acquire GMS Inc. (GMS), a North American specialty building products distributor. Under the terms of the merger agreement, a subsidiary of SRS will commence a cash tender offer to purchase all outstanding shares of GMS common stock for $110 per share, reflecting a total equity value of approximately $4.3B and implying a total enterprise value of approximately $5.5B. The consummation of the tender offer is subject to customary closing conditions, including the receipt of required regulatory approvals and the tender of a number of shares of GMS common stock representing a majority of the then-outstanding shares, and is expected to be completed by the end of fiscal 2025. If the tender offer is successfully completed, a wholly owned subsidiary of SRS will merge with and into GMS, and all of the outstanding shares of GMS that were not tendered in the tender offer will be converted into the right to receive the same $110 per share in cash offered to GMS shareholders in the tender offer. The transaction is expected to be funded through cash on hand and debt and is not expected to alter the company’s plan to return to a 2.0x leverage ratio by the end of fiscal 2026. This transaction is expected to be accretive to adjusted EPS in the first year following closing, excluding synergies.