Home Depot Inc. (NYSE:HD) is looking to acquire GMS Inc. (NYSE:GMS), a Georgia-based building products distributing company.
What Happened: This move from Depot can commence a bidding war in the fragmented construction material space with Brad Jacob's QXO Inc. (NYSE:QXO), according to a report by The Wall Street Journal.
QXO on June 19 hit the headlines with its unsolicited offer of $5 billion, a $95.20 per share all-cash offer to acquire GMS with a response deadline of June 24. Now, Home Depot's similar desire with undisclosed financial terms has positioned it directly against QXO.
GMS, a prominent North American building material distributor, operates with more than 320 distribution centers and around 100 tool rental locations across the U.S. and Canada.
The pressured profitability due to the deflation in prices of steel and high operating costs has drawn takeover interest from players in the overlapping sector.
SEE ALSO: GMS Gears Up For Q4 Print; Here Are The Recent Forecast Changes From Wall Street’s Most Accurate Analysts
Why It Matters: Signals of Brad Jacob's interest in acquiring soared the prices of GMS, which lately had modest sales growth of approximately 3%. While QXO, launched in December 2023, is smaller compared to Home Depot in terms of capitalization, it is known for its M&A expertise under Jacob's leadership.
The continued aggressive push by the retailers signals an expansion of the professional contractor market, the segment that has already been enlarging into multibillion-dollar acquisitions, such as the purchase of SRS Distribution, a Texas-based distributor, by Home Depot for $18.25 billion.
As per the report, QXO's bid is being evaluated by the GMS's board. If they fail to respond by the end of the deadline, QXO will escalate its offer directly to the shareholders.
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