Home Depot acquires Hughes Supply

In its largest purchase since it was founded in 1978, Atlanta-based Home Depot acquired Hughes Supply, a $4.42 billion distributor of construction materials and supplies, for $3.47 billion. The sale price includes the payment of $46.50 per outstanding share and the assumption of $285 million in net debt.

Orlando, FL-based Hughes Supply will become part of Home Depot Supply, a division that serves contractors, municipalities, and other business-to-business customers.

Hughes Supply doesn’t sell its products online or by catalog, but Home Depot Supply does: Its two print catalogs are Home Depot Supply (formerly Maintenance Warehouse) and White Cap Construction Supply Buyer’s Guide. The latter is part of White Cap Industries, a distributor acquired in June 2004.

It is unclear at this point whether Home Depot will create a direct sales division for Hughes. “After the acquisition closes, a cross-functional team will integrate Hughes into Home Depot Supply,” says Home Depot spokesperson Paula C. Smith. “It will all be figured out when the acquisition closes.”

Nonetheless, “it’s public knowledge that we’re expanding in e-commerce,” says Frank Garcia, the senior director of Home Depot Supply, “and I would think this would follow in that trend.”

Founded in 1928, Hughes Supply has 500 locations in 40 states. The company reported a profit of $124 million for the year ended Jan. 31, 2005. Home Depot is the world’s largest home-improvement specialty retailer and the second largest retailer in the U.S., with fiscal 2004 sales of $73.1 billion. It operates more than 2,000 Home Depot, EXPO Design Center, and Home Depot Supply stores and warehouses.

The company also mails the Home Depot Direct consumer catalog. And in September it dropped more than 1 million copies of the debut edition of the 10 Crescent Lane title, an upscale catalog of lighting, bedding, furniture, and decorative accessories, such as $675 coverlets, $199 vases, and $549 mother-of-pearl-framed mirrors.

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