[Fox Business] Home Depot bulks up Pro-business with $18.25B deal for building products supplier SRS

Home Depot will buy building materials supplier SRS Distribution in an $18.25 billion deal, in the top U.S. home improvement chain’s largest deal as it looks to broaden its professional customer base to better tackle tepid demand.

The company and rival Lowe’s Cos. have projected a slower recovery this year as U.S. consumers pause big home remodeling and renovation projects due to sticky inflation.

This has put pressure on the Do-It-Yourself (DIY) segment, which makes up about half of Home Depot’s business, and the company has sharpened its focus on “Pro-customers” such as professional builders, contractors, handymen to drive sales.

Thursday’s deal will expand Home Depot’s total potential market by about $50 billion to roughly $1 trillion, the company said. In 2020, Home Depot had bought back industrial materials wholesaler HD Supply Holdings in an $8 billion deal.

SRS, a portfolio company of private equity firms Leonard Green & Partners and Berkshire Partners, serves Pro-customers including roofers, landscapers and pool contractors. It will operate as an independent unit within Home Depot under its current leadership team.

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Leonard Green had bought a majority stake in SRS in a $3.55 billion deal in 2018, a person familiar with the matter told Reuters on Thursday.

Last December, Leonard Green allowed some of its fund investors to cash out of SRS at a valuation of about $16 billion, including debt, the source said, adding Home Depot agreed to the deal following a sale process for the company.

“This is a great deal at a great time,” said Thomas Hayes, chairman at Great Hill Capital.

“You need (to) only look to the housing shortage – and young demographics of our millennials – to understand that as rates moderate construction will boom,” he said.

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Shares of Home Depot, which has a market value of $382.42 billion according to LSEG data, were flat in early trading.

The acquisition will add SRS’ network of more than 2,500 professional sales force in 760 plus locations to Home Depot’s footprint of more than 2,000 U.S. stores and distribution centers.

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The deal, which would involve taking on the debt of SRS, will be funded with cash on hand and debt and is expected to close by the end of fiscal 2024.

SRS, which raked in $10 billion in revenue in 2023, has been on an acquisition spree. It closed 17 deals in the past three years focused on roofing, metal and building materials suppliers, according to its website.

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[Fox Business] EV maker slashes prices as it tries to avoid bankruptcy

California-based electric vehicle startup Fisker slashed the prices of some of its vehicles as it fights to avoid bankruptcy after a potential deal with another automaker fell through. 

The manufacturer’s suggested retail price for the 2023 Ocean electric SUV lineup in the U.S., which is equipped with Fisker’s 2024 Ocean OS software version 2.0, fell by tens of thousands of dollars.

Fisker lowered the MSRP for the 2023 Ocean Extreme trim from $61,499 to $37,499, the company said Wednesday. The 2023 Ultra trim will be priced at $34,999, down from $52,999, and the 2023 Sport will be priced at $24,999, down from $38,999, according to the automaker.

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The company said some of its Ocean vehicles have as much as $7,000 worth of additional options that are included in the discounted prices, which will take effect on Friday. 

Fisker said in a statement that it “is strategically positioning the all-electric Ocean SUV to be a more affordable and compelling EV choice, competitively available to EV buyers in the broadest possible market, and constantly improving via frequent Over-the-air (OTA) software updates.” 

Still, industry analysts believe the company could fall victim to bankruptcy. 

“It’s sad to see any company go bankrupt, but we expect to see more of them in the EV space,” Thomas Hayes, chairman at hedge fund Great Hill Capital, told FOX Business. “At the end of the day, it is unclear whether people actually want EVs, or they simply want Teslas.” Hayes said there is a difference because one is a commodity and one – Tesla – is a brand, lifestyle and ideology.

“That said, in the EV space – over time – there will be Tesla and the major incumbent ICE [internal combustion engine] producing OEMs [original equipment manufacturers] left standing, namely those OEMs who continue to choose to – or are forced by governments – to produce EVs,” such as General Motors, he added. 

The news came just days after the New York Stock Exchange announced that it would delist Fisker’s shares, saying that the “stock is no longer suitable for listing based on abnormally low price levels.” 

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According to a filing with the Securities and Exchange Commission (SEC), the unnamed automaker that had been in talks to make a deal with Fisker had terminated negotiations on March 22. 

Since then, Fisker has been forced to evaluate strategic alternatives, which may include in or out of court restructurings and capital markets transactions. 

If Fisker files for bankruptcy, it would be the second auto startup from CEO Henrik Fisker to fail. Fisker Automotive filed for bankruptcy in 2013. 

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