- GMS Inc. (GMS) shares jumped 28.31% to $103.94 following a WSJ report of a potential bidding war between The Home Depot, Inc. (HD) and QXO, Inc. (QXO) to acquire the building-products distributor.
- QXO’s offer of $95.20 per share, a 17.5% premium over GMS’s closing price of $81.01, values GMS at $3.62 billion in market cap and $5 billion including debt, while Home Depot’s bid price remains undisclosed.
- GMS’s extensive network of 320 distribution centers and nearly 100 tool sales, rental, and service centers makes it a strategic target, especially after Home Depot’s $18.25 billion acquisition of SRS Distribution, which operates 760 locations across 47 states.
GMS Inc. (GMS) shares surged 28.31% to $103.94 in early trading Friday, following a Wall Street Journal report that The Home Depot, Inc. (HD) has submitted a bid to acquire the building-products distributor, sparking a potential bidding war with QXO, Inc. (QXO). This development underscores the growing consolidation in the construction supply sector, as major players seek to expand their market reach and operational capabilities. While the exact price of Home Depot’s offer remains undisclosed, QXO’s proposal to acquire GMS for $95.20 per share in cash, representing a 17.5% premium over GMS’s closing price of $81.01 on June 18, provides a benchmark. QXO’s bid values GMS at a market capitalization of $3.62 billion, with a total enterprise value of $5 billion, including debt.
Based in Tucker, Georgia, GMS operates an extensive network of 320 distribution centers and nearly 100 tool sales, rental, and service centers, making it a valuable asset in the building-products distribution market. The company’s broad footprint and diverse offerings, including wallboard, ceilings, and steel products, position it as a strategic target for companies like Home Depot, which is aggressively expanding its professional contractor business. Home Depot’s recent acquisition of SRS Distribution, finalized on June 18, 2024, for $18.25 billion – the largest in its history – highlights its commitment to this strategy. SRS, a distributor of roofing, landscaping, and pool products, operates 760 locations across 47 states, significantly enhancing Home Depot’s distribution network and market presence.
The bidding war for GMS reflects the intense competition within the construction supply industry, driven by rising demand for building materials and services amid ongoing infrastructure and housing projects. Home Depot’s interest in GMS aligns with its goal of strengthening its supply chain and capturing a larger share of the professional market, which includes contractors and builders. QXO, led by serial dealmaker Brad Jacobs, is similarly motivated to scale its operations through strategic acquisitions, with its $5 billion offer signaling confidence in GMS’s growth potential. The 28.31% spike in GMS’s stock price reflects investor optimism about the likelihood of a competitive auction, potentially driving the final acquisition price above QXO’s $95.20 per share bid.
The construction supply sector is undergoing rapid transformation, with consolidation enabling companies to achieve economies of scale, streamline logistics, and better serve customers. Home Depot’s acquisition of SRS, which added significant distribution capacity, has already reshaped the competitive landscape. A successful bid for GMS would further solidify Home Depot’s dominance, while a QXO victory could establish the company as a formidable player in the industry. For GMS, the bidding war presents an opportunity to maximize shareholder value, with its board actively evaluating QXO’s proposal and likely to consider Home Depot’s offer in the coming days.
As the situation unfolds, market participants will closely monitor developments, particularly any updates on Home Depot’s bid price and potential counteroffers from QXO. The outcome of this acquisition battle could have significant implications for the construction supply market, influencing pricing, distribution strategies, and customer access to building products. For investors, GMS’s soaring stock price highlights the high stakes of this deal, with the finance card above providing real-time data on GMS ($103.89) and Home Depot ($350.34) as of June 20.
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