The roofing supply and distribution industry made a splash on Thursday as news broke that Home Depot announced it planned to acquire one of roofing supply’s "Big 3," announcing it would purchase SRS Distribution in a deal worth $18.25 billion, including debt.

“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,” Dan Tinker, president and CEO of SRS, said in a March 28 statement announcing the purchase. 

“We set out to find the optimal strategic outcome for the business, and we strongly believe we have achieved just that,” Tinker added. “With this combination, the future has never been brighter for our supplier partners, our Pro customers, and our team.”

The acquisition of SRS is Home Depot's most significant investment within the ‘pro’ market and is poised to expand the Big Box retailer’s total potential market by about $50 billion to roughly $1 trillion, the company said in a news release. 

Details of the purchase include adding SRS' network of more than 2,500 professional sales forces in more than 760 locations to Home Depot's footprint of more than 2,000 U.S. stores and distribution centers. Home Depot said it will also assume SRS’ debt and will fund the purchase through a combination of cash on hand and debt with an expected close by the end of fiscal 2024.

“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,” said Ted Decker, chair, president, and CEO of The Home Depot. 

“SRS’ branch network, coupled with The Home Depot’s 2,000-plus U.S. stores and distribution centers and comprehensive product offering provides the residential and commercial Pro customer with more fulfillment and service options than ever before,” Decker continued. “I look forward to welcoming Dan and the entire SRS team to The Home Depot and capturing the exciting opportunity ahead.”

SRS Distribution currently has two private equity investors: Berkshire Partners LLC, which bought its stake in 2013 and Leonard Green & Partners L.P., which added SRS to its portfolio in 2018. 

“Over the past 16 years, SRS Distribution has successfully grown its business while delivering tremendous shareholder value to its investors and, more uniquely, to its employees,” said Jon Seiffer, senior partner at Leonard Green. 

“This next chapter with The Home Depot is a logical step in SRS’ evolution and will mutually benefit both companies’ growth prospects for the benefit of all employees, customers, and suppliers,” said Josh Lutzker, managing director at Berkshire Partners.

Founded in 2008 and headquartered in McKinney, Texas, SRS Distribution has grown into one of the fastest-growing building product distributors in the United States. Since its inception, SRS has established a differentiated growth strategy and entrepreneurial culture focused on serving customers, partnering with suppliers, and attracting some of the industry’s top talent. SRS Distribution currently operates under a family of distinct local brands encompassing more than 760 locations across 47 states.

Shares of Home Depot, which trades on the New York Stock Exchange under the ticker symbol ‘HD’ and has a market value of $382.42 billion according to LSEG data, remained largely unchanged before Thursday’s opening bell.