Home Depot Buys GMS for $4.3 Billion to Win More Contractor Sales

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Home Depot’s latest billion-dollar acquisition signals a clear shift in strategy: winning over the nation’s contractors. With its 4.3 billion dollar agreement to acquire GMS through its SRS Distribution unit, Home Depot is putting more muscle behind its push to serve professionals who handle large, repeat projects that generate steadier revenue than casual do-it-yourself shoppers.

GMS, short for Gypsum Management and Supply, operates an extensive network supplying drywall, ceilings, insulation and other building products. By bringing GMS into SRS Distribution, which Home Depot itself purchased for 18.25 billion dollars in 2024, the retailer expands deeper into the supply chain that contractors rely on to keep job sites running efficiently. For Home Depot, the goal is simply to tap into a market that values scale, inventory and speed, even as its traditional customer base has become more cautious in a high-rate environment.

Breaking down the 4.3 billion dollar acquisition

The deal structure shows Home Depot’s commitment to making its contractor business more robust. Through SRS Distribution, the company will acquire all outstanding shares of GMS at 110 dollars each. That price tag pushes the transaction’s total enterprise value to about 5.5 billion dollars when debt is included.

For SRS Distribution, the move fits well. Based in Texas, SRS is already a major supplier of roofing, landscaping and pool-related products to professional customers. By adding GMS’s drywall and building materials reach, the company deepens its ability to cover multiple construction categories under one network. SRS has grown through a steady stream of smaller deals, but the GMS buyout ranks among its largest yet.

If approved, the acquisition will close by early 2026, giving Home Depot a wider footprint and supply chain advantages that its contractor customers increasingly demand.

How Home Depot edged out Brad Jacobs and QXO

This buyout did not happen in isolation. Brad Jacobs, a billionaire known for high-stakes acquisitions, made headlines earlier this year by offering an all-cash bid for GMS valued near five billion dollars. Jacobs signaled a willingness to launch a hostile takeover if GMS management rejected the proposal, raising the stakes for Home Depot.

In the end, GMS’s board accepted SRS Distribution’s proposal instead. While the final figure was slightly lower than Jacobs’ cash bid, Home Depot’s capacity to integrate GMS into an already established professional supply network appeared more attractive to shareholders and executives alike.

The market rewarded that stability. GMS shares rose more than 11 percent after the announcement, showing that investors see a better long-term fit with Home Depot’s contractor-focused strategy. By contrast, Home Depot shares stayed flat as investors weighed the scale of its latest spending.

What this means for the future of Home Depot

For Home Depot, this acquisition ties directly to the changing dynamics of home improvement retail. As higher mortgage rates slow housing turnover and limit consumer budgets, demand for major do-it-yourself projects has softened. In response, Home Depot is counting on electricians, roofers, remodelers and other professionals to help balance weaker weekend traffic in its aisles.

The numbers reflect this shift. Home Depot forecasts total sales will grow 2.8 percent for the full fiscal year, with comparable sales, a key retail measure that excludes the impact of new store openings and other one-time factors, projected to rise about 1 percent. Those figures would likely be weaker without the steady stream of orders from professionals.

With the GMS deal, Home Depot secures another piece of that strategy. By controlling more of the supply chain and distribution network, it positions itself to serve contractors faster and more reliably than competitors that still rely heavily on in-store retail sales alone.

Sources:

• CNBC