Home Depot Inc (HD) said on Monday that it had agreed to acquire HD Supply Holdings Inc for nearly $8 billion, as the home improvement chain seeks to expand its construction and maintenance goods business.
The company said it intended to offer $56 per share in cash to shareholders of HD Supply.
Home Depot shares closed higher for a second consecutive trading session in New York on Monday. It has also been the sharpest single-session gain since November 10th. The stock went up 0.87% ($2.40) to $279.57, after touching an intraday high at $281.27, or a price level not seen since November 12th ($281.76).
Shares of Home Depot Inc have risen 28.02% so far in 2020 compared with a 12.26% gain for the benchmark index, S&P 500 (SPX).
In 2019, Home Depot’s stock went up 27.10%, thus, it underperformed the S&P 500, which registered a 28.88% gain.
Home Depot said the acquisition was expected to be finalized during its fiscal fourth quarter ending on January 31st.
J.P. Morgan Securities LLC advised Home Depot on the financial aspects of the deal, while Wachtell, Lipton, Rosen & Katz served as its legal counsel.
HD Supply is among the largest distributors of construction, industrial and maintenance supplies in North America.
Analyst stock price forecast and recommendation
According to CNN Money, the 29 analysts, offering 12-month forecasts regarding Home Depot’s stock price, have a median target of $310.00, with a high estimate of $350.00 and a low estimate of $243.00. The median estimate represents a 10.88% upside compared to the closing price of $279.57 on November 16th.
The same media also reported that at least 17 out of 33 surveyed investment analysts had rated Home Depot’s stock as “Buy”, while 12 – as “Hold”. On the other hand, 1 analyst had recommended selling the stock.