Home Depot Acquires GMS Inc. for $5.5B, Stock Surges 11.7%

GMS Inc. (NYSE:GMS) agreed to be acquired by Home Depot's specialty trade distribution arm, SRS Distribution, in a $5.5 billion deal valuing GMS shares at $110 each, a premium that led to an 11.73% jump in GMS stock. The acquisition is expected to benefit shareholders, employees, customers, and suppliers, with GMS CEO John Turner Jr. remaining in his role within SRS. Following the announcement, multiple brokerage firms including Barclays, RBC Capital, Truist, Baird, and Loop Capital raised their price targets for GMS to $110, reflecting optimism about the deal’s potential to revive earnings despite pressure from residential and commercial demand headwinds. These brokerages mostly maintain Hold or Sector Perform ratings, signaling a cautious but positive outlook. Despite the elevated price targets, some valuation models like GuruFocus suggest a potential downside from the current price, indicating a divergence in market sentiment. The combined Home Depot and GMS operations will create a significant footprint across North America, enhancing offerings to professional contractors.