Home Depot Bets $9 Billion on Life After Covid-19
Buying HD Supply – a supplier to hotels, senior-living centers and apartment buildings – is a vote of confidence in a post-pandemic future.
If M&A is a sign of confidence, Home Depot’s takeover of HD Supply points to hope for an end to the pandemic.
Photographer: Chris Rank/Bloomberg
Among the industries hit hardest by the pandemic, few have fared worse than hospitality. Tourism and business travel have stalled amid government-mandated lockdowns and fears of infection. Hotels got lumped in with restaurants and gyms as the locations most prone to the spread of coronavirus in a recent study conducted by researchers at Stanford University and Northwestern University. And yet, Home Depot Inc. just agreed to pay $8.7 billion to buy a company that gets a fifth of its revenue from selling maintenance products — think janitorial supplies, but also faucets and air conditioners — to hotels and resorts.
The home-improvement retailer said Monday that it was acquiring HD Supply Holdings Inc. for $56 a share. That works out to $8 billion after adjusting for the target's net cash position. This is a reunion of sorts: the HD in HD Supply used to stand for Home Depot, which sold the business to a private equity consortium in 2007 for $8.5 billion.