Early this week, Home Depot said one of his business units bought the dealer for construction products GMS For around $ 4.3 billion, which prevails in a bidding war and shows how serious the DIY chain is about gaining the market for professional contractors at a time.
GMS, whose name stands for “Gypsium management and care” and is based in Tucker, Georgia, is hardly the sexiest employment goal. On the other hand, it has a wide network of 320 sales centers that offer things such as Wallboard, blankets, steel frames and other structures. In addition, GMS operates around 100 tool sales, rental and service centers for residential and commercial contract customers, all Home Depot starts.
The deal follows the Landmark acquisition of Home Depot last year SRS sales (the company that actually buys GMS). This was the greatest acquisition in the history of the company, which aimed to win the Home Depot a much larger proportion of the Mammoth Professionals Contractor segment. As a rule, these customers have used only a little home depot and Lowe and worked closer together with single dealers at home who are aimed at specialists.
With the GMS deal, SRS dominate the market for professional suppliers both outside the house (roofing, pool, garden) and inside (wall board, steel frame and ceilings). Cowen & Co -Analyst Max Rakhlenko wrote in a research note. Rakhlenko praised the deal and said that it would “enable SRS to expand into additional verticals, increase the market share, consolidate the industry and to increase the supply chain and the sales network of HD sensibly.”
While the market was neither excited nor alerted by the GMS News from Home Depot (its shares were on the day of the announcement), the Together -Home Depot Shoven in its strategy a big, thoughtful pivot. Home Depot is generally seen as one of the most successful retailers over the past 20 years, which has cleverly used a hot housing market that led to more people renovating their houses. However, Home Depot believes that robust growth will not only come from its 2,000 big box shops in the future that serve people who perform relatively simple home projects. Instead, it would like to give up a share of the large orders that are given up by experts for many more projects, such as swimming pool installations and roof repairs. In His first quarter In the current financial year, sales in US branches rose by 0.2%for at least one year and showed the need for this updated strategy.
“The growing professional is an integral part of our growth strategy,” said Ann-Marie Campbell, Senior Executive Vice President Us Stores and Operations in Home Depot, in February to the analysts of Wall Street. And it is the cornerstone of the three -year -old CEO of Home Depot, Ted Decker, in his efforts to maintain the success of a retailer who was wild among his two predecessors.
The offers are reminiscent of how thoughtful home depot has long been in its M&A strategy. About 20 years ago, Home Depot concentrated his M&A on the purchase of brands to fill out the range in the shop. In the 2010s it invested in its e-commerce fireplace and logistics as well as in the digital sale of dinner. In recent times, the focus was on the modernization of its range for growing areas such as Smart -Home products.
This M&A approach has served the known retailer well-known and helped him with the growth of sales of the ore rival rival rival with annual growth growth: Last year, the annual turnover of $ 159.5 billion, almost twice as high as a decade before.
And it is refreshing when you look at so many shops in the retail and consumer goods world that do not change companies, but have led to great prescriptions.
For years, Lowe spent years to pursue the Canadian retailer Rona in order to grasp itself north of the border, just to sell it two years ago and lose about 2 billion US dollars. The acquisition of Tapestry from Kate Spade in 2017, whose sales in the last quarter fell by 13%, has led to a number of depreciation. Capri Holdings Versace recently sold with great loss. The purchase of Walgreens Boots Alliance for a few years of 2,000 years Ritus help The business proved to be a serious waste of money, early this year, Coca-Cola Received 760 million US Dollar tree said it sold its family division with great loss.
And again and again it works. About 70% of M&A offers are failures. Many of them can feel as if hail Mary is being said goodbye to a brand that desperately takes out a rival, or simply overestimates the result of a company that overrides its ability to turn around. Yes, there are concerns that a M&A cycle could recover the margins of the home depot at short notice. However, the deliberate and thoughtful approach of Home Depot for M&A has largely paid off in the long term and should serve as a model for large companies to make successful dealsmaking.
