08:42 AM EDT, 03/28/2024 (MT Newswires) -- Home Depot ( HD ) on Thursday agreed to purchase building products supplier SRS Distribution in a deal worth roughly $18.25 billion, including debt, as the home improvement retailer seeks to accelerate its growth within the residential professional customer market.

The company plans to make the acquisition through a subsidiary and fund it with cash on hand and debt. The company aims to access debt capital markets to "raise incremental indebtedness" to support the deal, Chief Financial Officer Richard McPhail said in a statement.

The deal, which requires approval from regulators, is expected to complete by the end of fiscal 2024.

Shares of Home Depot ( HD ) edged up 0.3% in recent premarket trading.

The retailer said the transaction will increase its ability to serve residential specialty customers and renovators. The acquisition also boosts its total addressable market by about $50 billion to $1 trillion. SRS Distribution has a sales force of more than 2,500 employees and operates more than 760 branches across 47 states.

"SRS is an industry leader with a proven track record of profitable growth across verticals," according to Home Depot ( HD ) Chief Executive Ted Decker. "SRS has built a robust and successful platform that will accelerate our growth with the residential professional customer while presenting future opportunities with the specialty trade pro."

The deal is anticipated to be dilutive to Home Depot's ( HD ) earnings on a per-share basis due to amortization costs. The transaction is set to be accretive from a cash EPS perspective in the first year after completion, excluding synergies. "We expect the acquisition to create significant shareholder value over the long term," McPhail said.

SRS Distribution CEO Dan Tinker and his senior leadership team will continue to lead the firm. "We believe this will enable us to better serve pros and continue growing in our large and highly fragmented market," Tinker said, referring to the deal.

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