NEW YORK – Top home improvement chain Home Depot Inc. (HD) on Tuesday agreed to buy construction materials supplier Hughes Supply Inc. (HUG) for nearly $3.2 billion as it expands its professional contracting business.
The deal represents a 21 percent premium over Hughes' closing stock price and comes a day after Home Depot acquired Chem-Dry, a franchiser of carpet and upholstery cleaning for mainly residential customers.
Home Depot will pay $46.50 a share to Hughes Supply stockholders and assume $285 million of the company's debt.
Shares of Hughes, which in the past had been rumored to be a Home Depot takeover target, closed at $38.55 on Monday.
As new-store growth slows, Home Depot has been making acquisitions in recent years to expand outside its current retail channels.
Hughes Supply, which itself has seen rapid growth through acquisitions, would be part of Home Depot Supply, a division focusing on professional contractors, municipalities and maintenance professionals. The acquisition will more than double the size of the unit, with projected 2006 combined sales approaching $12 billion, the two companies said.
Home Depot said the deal, which it would fund with a combination of cash on hand and debt, would add to earnings within its first year.
Fox News First
Get all the stories you need-to-know from the most powerful name in news delivered first thing every morning to your inbox.
By entering your email and clicking the Subscribe button, you agree to the Fox News Privacy Policy and Terms of Use, and agree to receive content and promotional communications from Fox News. You understand that you can opt-out at any time.