The home-improvement giant The Home Depot has entered into an agreement to purchase the parent company of Heritage Pool Supply Group.
The parent company, SRS Distribution, is expected to sell for $18.25 billion. Officials said the transaction will close by the end of fiscal 2024. Home Depot’s fiscal year typically finalizes at the end of January.
Where SRS has been backed by private equity firms Berkshire Partners and Leonard Green & Partners, it now will be part of a publicly traded company.
Heritage expects the move to help increase its reach into new product categories and customers. For its part, the Home Depot looks forward to deepening its reach with the professional contractor market, particular general contractors working on complex projects and consolidating product purchases.
"Going forward, we will be able to leverage SRS' deep product catalog and distribution capabilities to help us better serve the complex project purchase occasion," said Home Depot CEO Ted Decker said in a conference call regarding the acquisition. "In addition, SRS will continue to serve their specialty trade pro customers who may be working on their own projects, or maybe a subcontractor working on a complex project with one of our targeted general contractors."
The Atlanta-based home-improvement giant expects the acquisition to grow its addressable market from approximately $50 billion to $1 trillion. Decker said approximately half of Home Depot's sales go to professional customers. "Over the last several years, we’ve been building out capabilities required to gain a greater share of wallet with the larger pros' more complex purchase occasion, targeting residential pro customers with a focus on renovator/remodelers, small home builders and property investors,” he said.
SRS' focus will remain on the specialty contractors it has served, Decker added. "Where they’re complementary, we can expose their catalog to our customer, and likewise we can provide more convenience to their customer," he said. "Their customers are obviously buying ladders, increasingly cordless nailers, and brands that we have will service that.”
SRS will continue operating as an independent business unit, with its senior leadership team intact. SRS President/CEO Dan Tinker will remain to lead that operation and report to The Home Depot’s CEO, Ted Decker.
“We are proud to be combining with The Home Depot to continue our growth journey with the additional resources and capabilities they will put behind us,” said Dan Tinker, President and CEO of SRS.
Matt McDermott is expected to remain as President of Heritage Pool Supply Group.
Officials said it's too early to know how they will address branding. “We have not gotten into that level of detail,” Decker said. “Branding would be on the table. There’s no urgency to do that. We’ll review that with Dan [Tinker] and his team.”
Heritage Pool Supply is SRS’s newest distribution company. It entered the industry in 2021 and, through some key early acquisitions that included marquee names such as Hachik, Bel Aqua Pool Supply and Pool & Electrical Products, quickly became the second largest in the U.S. It also grew through the opening of new Heritage-branded locations. The pool/spa distributor now boasts 115 locations in 32 states. Among its various brands, SRS holds 760 locations in 47 states.
Home Depot officials credited this quick positioning among SRS’ various brands for making it a desirable acquisition, making note of the company's ERP system and its ability to quickly integrate newly acquired companies. They also said SRS has a track record of growing sales faster than its competitors.
“SRS’ ability to build leadership positions in each of its trade verticals while generating significant revenue growth is a testament to its strong vision, leadership, culture, and execution,” Home Depot’s Decker said in a press release. “SRS has built a robust and successful platform that will accelerate our growth with the residential professional customer while presenting future opportunities with the specialty trade pro."In 2023, SRS saw approximately $10 billion in revenue.
SRS Distribution is based in McKinney, Texas. Its brands serve contractors in the roofing, landscaping and pool/spa industries. Home Depot officials said approximately two-thirds of SRS's business falls on the roofing and lumber side, with the newer landscape and pool/spa supply businesses nearly evenly splitting the rest.
More information will be reported as it becomes available.
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