Home Depot to Acquire Supply Specialist White Cap, Mexico's Home Mart

June 1, 2004
ATLANTA The Home Depot last month entered into an agreement to acquire White Cap Construction Supply, a leading distributor of specialty hardware, tools

ATLANTA — The Home Depot last month entered into an agreement to acquire White Cap Construction Supply, a leading distributor of specialty hardware, tools and materials targeting large- and medium-sized construction contractors. The acquisition is part of Home Depot's strategy to expand its professional customer market base.

Headquartered in Costa Mesa, Calif., White Cap will become part of The Home Depot Supply division. Terms of the agreement were not disclosed. Completion of the transaction is subject to customary conditions.

“We remain committed to finding new business opportunities for The Home Depot, and this acquisition adds new customer channels and product selling opportunities,” said Frank Blake, executive vice president, business development, The Home Depot. “We were attracted to White Cap because of its leadership position in the industry, and because its customers and product lines complement our existing retail business. White Cap represents another step in offering professional customers products and services for the entire construction process.”

The total professional contractor market is estimated to be a $410 billion opportunity. White Cap's estimated annual sales are approximately $500 million.

Founded in 1976, White Cap Construction Supply operates 70 branch locations throughout the United States and employs 1,720 people.

White Cap also offers rental services. With rental departments in about 865 of its stores, with plans to grow to more than 1,000 departments over the next year, the acquisition of White Cap also enhances Home Depot's position in the rental market.

The Home Depot also recently announced it has signed a definitive agreement to acquire Home Mart, the second largest Mexican home improvement retailer. The transaction is subject to approval by the Mexican regulatory authorities and customary closing conditions; financial terms were not disclosed. When the acquisition is completed, Home Depot will acquire 20 Home Mart locations, bringing its total store count in Mexico to 39.

Home Mart will add a prominent presence in Mexico City for Home Depot, plus a store base in seven new markets, enhancing its position in a nearly $15 billion market.

Home Mart was established in 1993. Its stores, which average 69,000 square feet, serve customers in the home improvement industry. Home Mart stores will convert to the Home Depot brand following a transition period and training for new associates. Ricardo Saldivar will lead the combined operation as president of Home Depot Mexico.

Home Mart does not provide rental services at this point, but Home Depot's vice president of rental and pro businesses Joe Dixon told RER: “We are always evaluating growth opportunities in all markets and products.”

In June 2001, Home Depot entered the Mexican market through the acquisition of Total HOME, whose stores in Monterrey and Mexico City were converted to Home Depot stores in March 2002. In 2002, the company acquired Del Norte, a four-store home improvement chain formerly based in Ciudad Juarez. Home Depot has opened 11 new stores since 2002 in Mexicali, Culiacan, San Luis Potosi, Monterrey, Tijuana, Leon, Chihuahua, Guadalajara, greater Mexico City (2) and Hermosillo.

The Home Depot also said it is raising its new store opening guidance from 175 stores to 185 new stores this year, including the 20 stores added through the Home Mart acquisition and reflecting the company's decision to move 10 stores previously scheduled to open in 2004 into 2005.

Home Depot Rentals is No. 7 on the RER 100.