US retailer The Home Depot has agreed to acquire building products distributor GMS Inc for $5.5 billion, including debt, outbidding rival QXO in a takeover battle for the specialty construction materials company.

Under the agreement announced on Monday, a subsidiary of Home Depot's SRS Distribution will launch a cash tender offer to purchase all outstanding GMS shares for $110 per share, representing a total equity value of approximately $4.3 billion. The offer represents a premium of approximately 36 per cent to GMS's share price as of 18 June, before QXO's hostile bid became public.

The deal comes after QXO, the investment vehicle of billionaire Brad Jacobs, made an unsolicited $5 billion proposal to acquire GMS for $95.20 per share in mid-June, threatening to take the offer directly to shareholders if the company did not engage by 24 June.

"Following careful consideration of The Home Depot's proposal, along with other potential opportunities for the Company, our Board determined that this transaction is in the best interests of GMS and all of our shareholders," said John J. Gavin, chair of GMS.

The acquisition will strengthen Home Depot's position in serving professional contractors through its SRS Distribution subsidiary, which the company acquired for $18.25 billion last year. Founded in 1971, GMS operates more than 320 distribution centres across the United States and Canada, offering wallboard, ceilings, steel framing and complementary construction products.

"The combination of GMS and SRS will provide the residential and commercial professional contractor customer with more fulfillment and service options than ever before," said Dan Tinker, chief executive officer of SRS. "Together, we'll create a network of more than 1,200 locations and a fleet of more than 8,000 trucks capable of making tens of thousands of jobsite deliveries per day."

Ted Decker, chair, president and chief executive officer of The Home Depot, highlighted the strategic value of the acquisition: "The Home Depot acquired SRS as a platform for growth, and SRS continues to demonstrate exceptional execution and strong performance."

The deal reflects broader consolidation in the building products distribution sector, as home improvement retailers seek to expand their professional contractor business whilst residential renovation spending remains subdued due to high interest rates.

John C. Turner Jr., president and chief executive officer of GMS, will continue to lead the company as part of the SRS organisation following completion of the transaction.

The acquisition is expected to close by the end of Home Depot's current fiscal year, ending 31 January 2026, subject to regulatory approvals and the tender of a majority of GMS shares. Home Depot will fund the transaction through cash on hand and debt.

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