What Home Depot’s Deal With HD Supply Means For The Company

Home improvement retailer The Home Depot said Monday its acquisition of HD Supply Holdings will give it an edge in the maintenance, repair and operations sector.

The big-box home improvement chain said it entered in to a definitive agreement to acquire HD Supply Holdings, Inc. for approximately $8 billion. HD Supply Holdings is a lead distributor of maintenance, repair and operations (MRO) products for multifamily dwellings and the hospitality business.

Craig Menear, chairman and CEO of The Home Depot, said in a statement the MRO sector is a $55 billion marketplace.

“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,” he said in a statement.

In a market rallying on the back of the latest COVID-19 vaccine news from Moderna, shares of The Home Depot were up 0.9% as of 10 a.m. ET on the acquisition announcement.

The Home Depot will release third-quarter earnings on Tuesday. With travel and other restrictions, consumers are targeting their spending on home improvements, bolstering profits for the likes of Lowe’s and Menard’s.

Big-box retailers, which kept their doors open through the pandemic, have performed well relative to their peers. Target (TGT), Walmart (WMT), Lowe’s (LOW) and Home Depot (HD) all reported record sales for the second quarter.

Third-quarter revenue for The Home Depot is expected to come in at $31.2 billion, up 17% from the same period last year, according to reporting from Marketplace.

The Home Depot said it would fund the transaction with cash on hand and debt. Subject to regulatory approval, the acquisition should be completed during the company's fiscal fourth quarter, which ends Jan. 31.