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Home Depot moves closer to SRS Distribution acquisition

EditorIsmeta Mujdragic
Published 06/14/2024, 10:53 AM
© Reuters.

ATLANTA - The Home Depot ® (NYSE: HD), the world's largest home improvement specialty retailer, has cleared a significant regulatory hurdle in its pursuit to acquire SRS Distribution Inc., with the expiration of the Hart-Scott-Rodino (HSR) Act waiting period as of 11:59 p.m. on June 13, 2024.

This development is a critical step towards completing the transaction, which is anticipated to be finalized on or about June 18, 2024, pending the satisfaction or waiver of the remaining customary closing conditions.

The HSR Act waiting period is a mandatory interval during which parties must not complete their transaction, allowing federal antitrust agencies to review the potential effects on competition. The end of this waiting period indicates that The Home Depot's proposed acquisition has not raised antitrust concerns that would warrant intervention by the authorities.

Home Depot's acquisition of residential specialty trade distributor SRS for $18.25 billion is a strategic move that analysts believe could unlock a $200 billion untapped market opportunity. This acquisition is expected to expand Home Depot's total addressable market by approximately $50 billion.

The Home Depot operates 2,337 retail stores across North America and employs around 465,000 associates. Its stocks are publicly traded on the New York Stock Exchange and are included in both the Dow Jones industrial average and the Standard & Poor's 500 index.

This information is based on a press release statement.

In other recent news, Home Depot Inc (NYSE:HD). has seen a flurry of activity. The company reported a first-quarter dividend of $2.25 per share, marking its 149th consecutive quarter of providing a cash dividend to its shareholders. In strategic moves, Home Depot has promoted Jordan Broggi to the position of executive vice president of customer experience and president of online, a role set to enhance the customer experience across all platforms.

Analysts have presented a mixed financial outlook for Home Depot. Firms like Barclays Capital Inc. and Piper Sandler maintain an "Overweight" rating with price targets reaching up to $400. However, others like D.A. Davidson & Co. remain neutral, reflecting concerns over the company's ability to meet sales targets amid soft comp trends.

TD Cowen adjusted its price target for Home Depot to $420 from $440, while maintaining a Buy rating. HSBC also revised its price target for Home Depot, reducing it to $318.00 from the previous $323.00 while maintaining a Reduce rating.

These are recent developments for Home Depot, providing insights into the company's current standing and future prospects.

InvestingPro Insights

The Home Depot's strategic move to acquire SRS Distribution Inc. is aligned with its status as a prominent player in the Specialty Retail industry. With the regulatory hurdle of the HSR Act waiting period now behind them, the company stands on the brink of potentially bolstering its already significant market presence. An important factor for investors to consider is The Home Depot's consistent track record of raising its dividend, which has seen an increase for 14 consecutive years, highlighting its commitment to shareholder returns.

In terms of financial health, The Home Depot operates with a moderate level of debt and has been profitable over the last twelve months as of Q1 2025. This profitability is reflected in its substantial market capitalization of $344.96 billion and a solid P/E ratio of 23.2, indicating investor confidence in its earnings potential. Additionally, the company's stock generally trades with low price volatility, providing a level of stability in an investor's portfolio.

While analysts have revised their earnings expectations downwards for the upcoming period, The Home Depot's long-term performance and its high return over the last decade suggest resilience in its business model. For investors looking for more in-depth analysis and additional "InvestingPro Tips," there are 19 more tips available on InvestingPro, including insights into the company's financial metrics and future projections. To access these valuable insights, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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