(Bloomberg) -- Home Depot Inc. is making its biggest acquisition ever to win over more professional contractors as the company looks beyond its do-it-yourself roots to revive growth.

The world’s largest home-improvement retailer said it would buy SRS Distribution Inc. for about $18.25 billion in a deal expected to close by early 2025. SRS generated $10 billion in sales last year serving roofers, pool contractors and landscapers. Home Depot said the acquisition would push it into new markets with a total value of $50 billion. 

Home Depot and rival Lowe’s Cos. both started out by serving homeowners but have been increasingly focused on winning over professionals. It’s a more lucrative sector with pricier projects that has helped the companies maintain growth as they slowed store openings. Home Depot already generates about half its revenue from pros, while Lowe’s is at roughly 25%.

“The deal allows them to accelerate growth” with professionals, a segment that is expected to grow faster than do-it-yourself in the coming years, according to Drew Reading, an analyst for Bloomberg Intelligence. There is still a lot of pent-up demand for bigger, more complex projects from the slowdown during the pandemic, while home purchases, which spur DIY activity, are expected to remain sluggish, he said. 

In addition to using cash on hand, Home Depot said it planned to tap the debt capital markets and raise incremental debt to fund the acquisition. To reduce leverage and maintain its credit rating, the company plans to pause share repurchases.

The shares were down less than 1% at 12:40 p.m. Meanwhile, Lowe’s was little changed and shares of Pool Corp., a competitor of SRS, declined 2.3%.

Some investors are likely concerned about stock buybacks being suspended, according to Reading. Home Depot is also coming off a rough patch, with sales declining 3% last year, the first annual drop since the fiscal year ending in January 2010, as the housing market slowed.

Leonard Green & Partners and Berkshire Partners became majority owners of SRS in 2018 at a valuation of 16 times trailing earnings before interest, taxes, depreciation and amortization, according to the SRS website. Home Depot is buying SRS from those firms at a similar multiple, the retailer said in a presentation.  

In SRS, based in McKinney, Texas, Home Depot will be getting a sales force of more than 2,500 at about 760 branches across 47 US states. SRS will largely operate as its own entity after the deal, but with its product catalog offered to Home Depot’s professional customer base, the retailer said.  

SRS could also be used as a platform to acquire more companies to serve pro customers, Home Depot Chief Executive Officer Ted Decker said on a call with analysts. The company had already been making deals to expand into new markets.

According to data compiled by Bloomberg, Home Depot’s previous largest deal was reacquiring HD Supply Holdings Inc. for more than $8 billion in 2020, in another transaction focused on expansion in the pro market.

“This is one of the absolute finest assets that we’ve seen,” Decker said of the SRS deal on the call. “It was so complementary.”

JPMorgan Chase & Co. advised Home Depot on the transaction, while SRS worked with Jefferies Financial Group Inc. and Goldman Sachs Group Inc.

--With assistance from Shelly Banjo and Matthew Monks.

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