Home Depot Inc. (HD) on Monday announced that it has decided to buy the remaining stakes of HD Supply Holdings Inc. (HDS) in a transaction valued at approx. $8 billion, in a bid to strengthen its position in the maintenance, repair and operations (MRO) marketplace.
Shares of HD Supply Holdings (NASDAQ: HDS) skyrocketed more than 24 percent this morning following the news, while Home Depot (NYSE: HD) stock is trading nearly flat.
Speaking on the deal, Home Depot CEO Craig Menear said in a statement “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."
Home Depot will complete the acquisition through cash and debt. The deal, anticipated to close by the end of January next year, values each share of HD Supply common stock at $56 per share, representing a hefty premium of 25 percent to the stock’s closing price in the previous trading session.
CEO at HD Supply, Joe DeAngelo said “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."
The announcement came just one day before its quarterly earnings report that will be released on Tuesday before the market opens. Analysts surveyed by FactSet expect the company to report a profit of $3.05 per share on revenue of $31.83 billion. Home Depot had posted earnings of $2.53 per share and revenue of $27.22 billion in the same period last year.
If we analyze the performance of Home Depot (HD) in the recent months, the stock has jumped more than 27 percent on year-to-date basis, about +16 percent over the past 6 months, and stayed almost flat during the last 3 months.
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