In a homecoming of sorts, The Home Depot will acquire a unit it sold some 13 years ago.
The home improvement giant said it will acquire HD Supply Holdings, a national distributor of maintenance, repair and operations (MRO) products in the multifamily and hospitality end markets. The home improvement giant will pay $56 per share for HD Supply's common stock for a total deal value of about $8 billion.
The acquisition is expected to position Home Depot as a premier provider in the MRO marketplace.
In 2007, Home Depot, which was then under the leadership of Frank Blake, sold HD Supply to a group of private equity firms. The current CEO of HD Supply is Joe DeAngelo, who served as executive VP and COO of the Home Depot from January through August of 2007.
“The MRO customer is highly valued by The Home Depot, and this acquisition will position the company to accelerate sales growth by better serving both existing and new customers in a highly fragmented $55 billion marketplace," said Craig Menear, chairman and CEO of The Home Depot. "HD Supply complements our existing MRO business with a robust product offering and value-added service capabilities, an experienced salesforce that enhances the strong team we have in place, as well as an extensive, MRO-specific distribution network throughout the U.S. and Canada."
The deal, which was announced a day before the retailer is due to report fiscal third-quarter results, is expected to be completed during the retailer’s fourth quarter. It is expected to be funded through cash on hand and debt.
"We plan to access the debt capital markets to raise incremental indebtedness in support of this acquisition," said Richard McPhail, executive vice president and CFO, Home Depot. “We also expect the transaction to be accretive to earnings in fiscal 2021, with potential for significant shareholder value creation over the longer term.”