Home Depot acquires HD Supply
The retail giant had first considered to start a share buy-back program.
Bank of America draws a positive balance for Home Depot (HD + 0.5%) after the retailer increased its position in the poorly penetrated MRO (maintenance, repair.) Market with the acquisition of HD Supply (HDS + 24.2%) & Operations). "HDS's customer base will expand the reach of Home Depot, which was historically single family homes.
HD estimates that the MRO market is approximately $ 55 billion, a relatively small portion of the broader $ 680 billion home improvement market. however, in which HD has had limited ownership over the past decade. HD acquired Interline Brands for USD 1.6 billion in 2015 to expand its presence in this market, which will be further accelerated with the re-integration of HD Supply ". BofA believes that the business combination may generate some synergies, but notes that the deal will reduce the likelihood or extent of Home Depot share buybacks.
"However, HD's focus on investing in future growth is in line with the company's culture and we continue to anticipate opportunities for future shareholder-friendly activities," the company said.