Home Depot Subsidiary to Acquire GMS for $5.5 Billion, Outbidding Rival QXO

The deal is worth $5.5 billion and expected to close by the end of January 2026. (Joe Raedle/Getty Images)

Home Depot’s trade distribution subsidiary SRS Distribution has reached an agreement to buy building-products distributor GMS for $110 a share in a deal totaling $5.5 billion, the companies announced Monday. The question now is whether a competitor that also made a takeover offer for GMS will increase its bid.

Home Depot stock was little changed in early morning trading, while GMS was up 12%.

The deal is expected to close by the end of Home Depot’s current fiscal year ending Jan. 31, 2026. Home Depot expects to fund the cash tender offer using both cash on hand and debt, the company said.

The deal will expand SRS’s service and fulfillment offerings for professional contractors, and create a network of more than 1,200 locations and 8,000 trucks to deliver supplies to work sites. Home Depot acquired SRS for $18.25 billion in June 2024.

The Home Depot offer trumps the rival bid for GMS by QXO, a construction-supplies company run by Brad Jacobs that recently purchased Beacon Roofing Supply for $11 billion. Earlier this month, QXO had made an unsolicited offer of about $5 billion, or $95.20 a share, for GMS. Home Depot’s $110-per-share offer is nearly 16% higher than that.

John Gavin, chairman of GMS, said in a press release about the Home Depot deal that the company’s board gave “careful consideration” to both the Home Depot/SRS offer “along with other potential opportunities,” and determined that the Home Depot transaction “is in the best interests of GMS and all of our shareholders.”

QXO had no comment when asked by Barron’s if it was planning to raise its bid for GMS. But analysts who follow QXO have previously said they doubted QXO would want to get into a long, costly bidding war with the much-larger Home Depot. QXO has also already shown a willingness to walk away from deals. The company made a $9.4 billion offer in September for French electrical supplier Rexel that Rexel rejected. QXO then set its sights on Beacon.

Jacobs has a history of making a series of acquisitions at other companies he has run in the transportation and logistics industries, with United Rentals and XPO, respectively. So it would not be a big surprise to see QXO quickly move on and look for other takeover targets in the highly fragmented building-products industry.

Shares of QXO rose more than 1% Monday morning. The stock has gained over 30% so far this year.

Write to Nate Wolf at nate.wolf@barrons.com and Paul R. La Monica at paul.lamonica@barrons.com