Reuniting: Home Depot Buying HD Supply in $8B Deal

The retailer originally divested HD Supply in 2007.

Home Depot Hd Supply
iStock/industrial Distribution

HD Supply is going back to its roots. After selling off the industrial products distributor for $8.5 billion in 2007, The Home Depot is buying it back in a deal the two companies announced Monday, valued at approximately $8 billion.

The news comes less than a week after a Bloomberg report surfaced about rival home improvement retailer Lowe’s, saying the company was in preliminary talks to acquire HD Supply, according to people familiar with the matter. But Lowe’s sternly shot down that rumor later in the day.

Home DepotThe Home Depot, which had 2019 total sales of $110 billion, said the deal is expected to position the company as a premier provider in the MRO marketplace.

“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, The Home Depot chairman and CEO. "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 involved The Home Depot buying all outstanding shares of HD Supply common stock for $56 per share, for a total enterprise value of approximately $8 billion. That's about 25 percent above HD Supply's closing share price on Friday and equates to an offer value of about $8.7 billion. The transaction is expected to be completed during The Home Depot’s fiscal fourth quarter, which ends on Jan. 31, 2021.

"We're thrilled that our associates are joining the Home Depot team and that our customers will be able to benefit from a broader product assortment, expanded delivery options and enhanced services nationally," said Joe DeAngelo, HD Supply chairman and CEO. "We are confident that this will position both The Home Depot and HD Supply for continued growth and success in the MRO distribution space."

The Home Depot will surely speak more on the matter in its third quarter fiscal report and earnings conference call on Tuesday morning.

Hd Supply"The board and I believe the strategic acquisition by The Home Depot, Inc. will create significant benefits for our customers, associates, and shareholders,” DeAngelo added. “We look forward to working together to deliver the safest, most dependable and innovative customer experience to the living space maintenance professional."

Since divesting HD Supply in 2007, the company has maintained a sizeable MRO presence through its Home Depot Pro offerings, catering to the contractor supply market. And in 2015, The Home Depot bought MRO products distributor Interline Brands — which last charted on Industrial Distribution’s Big 50 List in 2018 at No. 12 — for $1.63 billion. The retailer hasn’t since broken out sales figures for Interline, which had 2017 total sales of $2.6 billion.

HD Supply — No. 4 on ID’s 2020 Big 50 List with $6.15 billion in 2019 sales — just sold off essentially half the company in October, completing the divestment of its Construction & Industrial – White Cap unit to private investment group Clayton, Dubilier & Rice for $2.9 billion in a deal valued at about $4 billion. That left HD Supply with its Facilities Maintenance unit, which had 2019 sales of approximately $3 billion. HD Supply had significantly downsized over the past six years, selling off its Hardware segment in 2014, its Power Solutions segment in 2015, its Interior Business Solutions segment in 2016 and Waterworks segment in 2017.

More in Mergers & Acquisitions