Atlanta-based The Home Depot last week completed its acquisition of Hughes Supply, Inc., a leading distributor of construction, repair and maintenance products. In accordance with the terms of the agreement as announced on Jan. 10, 2006, The Home Depot acquired Hughes Supply for aggregate consideration of $3.51 billion, including the payment of $46.50 per outstanding share and the assumption of $325 million in net debt.
Hughes Supply and Home Depot Supply will be combined to create a division that serves business-to-business customers, including homebuilders, professional contractors, municipalities and maintenance professionals. Both companies have already built leadership positions in a range of markets, and the combination of the two will provide customers with a continuum of products and services from infrastructure through construction to lifetime maintenance.
The close of the Hughes Supply transaction marks the largest acquisition ever by The Home Depot, more than doubling the size of Home Depot Supply. The newly combined organization has more than 20,000 employees in more than 900 locations with projected 2006 combined sales approaching $12 billion.
"Home Depot Supply and Hughes Supply are a great strategic fit, and this acquisition is an important element of our growth strategy to expand our presence in the $410 billion professional market," said Bob Nardelli, chairman, president and CEO of The Home Depot. "We plan to repeat in the professional space the same type of market transformation The Home Depot pioneered and executed in the do-it-yourself retail space. We know that joining forces with Hughes Supply, a great company with a proven leadership team, a solid supplier base and a reputation for excellent customer service, will help us reach our goal."
As a distributor of infrastructure, construction, repair and maintenance-related products with a 78-year history, Hughes Supply operates in 40 states with more than 500 locations. The integration adds to Home Depot Supply's strong positions in waterworks, non-industrial facility maintenance, professional construction supply and plumbing, while adding new platforms in electric utilities, industrial pipes, valves and fittings, and electrical products distribution.
"The Hughes Supply acquisition provides scale to accelerate the execution of Home Depot Supply's strategy and immediately gives us an unparalleled national footprint of more than 900 locations," said Joe DeAngelo, executive vice president, Home Depot Supply.
The Home Depot funded the acquisition with proceeds from $4 billion in senior notes ($1 billion in 5-year notes and $3 billion in 10-year notes) issued March 24, 2006, pursuant to the company's $5 billion shelf registration. The deal will be accretive to earnings per share within its first year.
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