Home Depot Plans to Acquire Hughes Supply

ATLANTA —  Home Depot Inc., the nation’s largest home improvement store chain, said Tuesday that it would buy Hughes Supply Inc., a distributor of construction, repair and maintenance products, for about $3.2 billion.

The deal would double the size of Home Depot’s supply division, which serves business customers, such as home builders, professional contractors, municipalities and maintenance professionals.

Orlando, Fla.-based Hughes Supply, one of the nation’s largest diversified wholesale distributors of construction, repair and maintenance-related products, has more than 500 locations in 40 states.

The purchase would create the nation’s largest diversified distributor of construction, repair and maintenance-related products, and the two companies would serve a $410-billion market, Home Depot spokeswoman Paula Smith said.

Home Depot said it would pay $46.50 per outstanding share for Hughes Supply, a premium of nearly 21% over Hughes’ closing price Monday of $38.55. In addition, Home Depot would assume $285 million in net debt as part of the deal.

Shares of Home Depot rose 98 cents, or 2.4%, to $41.80. Hughes shares rose $7.06, or 18.3%, to $45.61.

Home Depot expects the deal to add to earnings per share within its first year.

Eric Bosshard, executive managing director of FTN Midwest Securities Corp., which covers Home Depot, said Hughes would be a “wonderful fit” with the company’s existing supply portfolio.

“It reinforces their commitment to their Home Depot supply strategy, which basically is a focus on becoming the industry leader and participating in the growth of the do-it-for-me market,” he said.