HVAC Breaking News

Jan. 16, 2006: Home Depot To Acquire Hughes Supply

ATLANTA - The Home Depot, one of the world's largest home improvement retailers, and Hughes Supply Inc., a leading distributor of HVAC, construction, repair, and maintenance products, have announced a definitive agreement for The Home Depot to acquire Hughes Supply for $3.47 billion, including the payment of $46.50 per outstanding share and the assumption of $285 million in net debt.

Hughes Supply will become part of The Home Depot Supply, a division that serves professional contractors, homebuilders, municipalities, and maintenance professionals. The addition of Hughes Supply will more than double the size of The Home Depot Supply with projected 2006 combined sales approaching $12 billion.

"By acquiring Hughes Supply, a company with a long and established reputation for excellence and service, we continue to execute our growth strategy laid out five years ago to enhance our core retail business, extend our business into adjacent areas, and expand into new markets," said Bob Nardelli, chairman, president, and CEO of The Home Depot. "As part of our expand strategy, The Home Depot and Hughes Supply are an ideal strategic and operational fit for each other, and we look forward to welcoming the Hughes Supply team into The Home Depot family."

Hughes Supply is one of the nation's largest wholesale distributors of HVAC, construction, repair, and maintenance-related products, with over 500 locations in 40 states. According to The Home Depot, Hughes Supply's leading position in many of the professional markets will add new platforms to The Home Depot Supply portfolio, while also providing additional scale to the division's positions in water works, professional construction supply, and multi-family maintenance. The combination is expected to deliver purchasing synergies; enhance overall operating effectiveness through scale, simplification, and knowledge transfer; and accelerate growth.

"Hughes Supply, our largest acquisition thus far, will accelerate the execution of The Home Depot Supply strategy of repeating in the professional space the same type of market transformation The Home Depot pioneered and executed in the do-it-yourself retail space," said Joe DeAngelo, executive vice president, The Home Depot Supply. "Together, we can better serve local, national, and government customers, offer the broadest range of products and services, and drive synergies by leveraging our combined purchasing power and customer service. We are looking forward to working closely with Tom Morgan, president and CEO of Hughes Supply, and the company's leadership team to establish an integrated professional business of motivated associates that focus on service, growth, and shareholder value."

"Home Depot Supply is well-positioned in the marketplace and possesses a wealth of resources to thrive in an industry where there are tremendous opportunities for growth," said Morgan. "This combination is positive for all of our constituents: creating significant shareholder value, increasing the opportunities available to our employees, continuing our commitment to superior service to customers, and building on the foundation of strong vendor relationships."

The Home Depot said it will fund the acquisition with a combination of cash on hand and access to debt capital markets through the company's $4 billion shelf registration, and that the deal will be accretive to earnings per share within its first year. The acquisition is expected to close as soon as possible pending appropriate shareholder and regulatory approvals.

Publication date: 01/16/2006

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