Updated at 10:44 p.m. on June 24.

Home improvement retailer The Home Depot has emerged as a second suitor for GMS Inc., the specialty building-products distributor that was the target of an unsolicited $5 billion cash bid from QXO Inc. — a bid that expired June 24 without extension as QXO made clear it would not enter a bidding war.

According to The Wall Street Journal, Home Depot’s approach followed QXO’s June 18 offer of $95.20 per share, roughly a 17 percent premium over GMS’s recent trading levels.

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QXO Sets Its Sights on GMS in $5 Billion Offer

Brad Jacobs’s QXO sent a letter to GMS’s board on June 18, setting a June 24 deadline to enter negotiations and warning that it would take its proposal directly to shareholders if rebuffed. 

GMS, based in Tucker, Ga., confirmed receipt of the QXO proposal and said its board will “carefully review and evaluate” the offer in consultation with its advisers, without commenting further until its review is complete, according to GMS’s Investor Relations webpage.

Home Depot’s undisclosed bid for GMS begins what could have sparked a bidding war among the industry’s largest players. Home Depot, with a market cap of nearly $345 billion, acquired SRS Distribution for $18.25 billion, which was finalized in June 2024.

GMS operates more than 320 distribution centers and nearly 100 tool sales, rental and service outlets serving both residential and commercial contractors.

Investors eagerly greeted news of competing offers. GMS shares jumped over 27% last Friday on the news, closing at $100.13 in heavy trading and surpassing QXO’s bid on expectations of an escalating auction. If rebuffed following the deadlines passing, QXO confirmed it would not increase its offer.

Home Depot shares edged lower on the news amid concerns that such acquisitions could pressure near-term margins and delay the company’s paused share-repurchase program.

Analysts at Truist Securities noted that while "QXO has a history of 'one and done' offers," Home Depot "may be willing to pay a higher multiple" to secure the acquisition, according to AInvest.

Home Depot’s scale and financial firepower differentiate its bid from QXO’s, analysts say. Unlike QXO, which is assembling a digital-first roll-up of regional distributors and recently closed an $11 billion deal for Beacon Roofing Supply, Home Depot brings an established national retail network and direct access to professional contractors through its more than 2,300 stores. 

The home-improvement giant’s ability to leverage its private-label brands and existing logistics infrastructure may allow it to integrate GMS’s product lines more swiftly and extract greater synergies, Reuters reported.

The out-of-pocket bid complicates QXO’s strategy. Jacobs, who has vowed to hit $50 billion in annual revenue within a decade, decided that GMS was not the hill to die on and walked away; there has been no comment from the GMS board about Home Depot’s superior proposal. QXO signaled ahortly after Home Depot put its chips on the table that $5 billion is its “full offer,” according to Bloomberg News. 

As GMS’s board weighs Home Depot's rival bid, shareholders should benefit from higher offers, industry observers say. But the outcome also hinges on which approach — Home Depot’s proven retail-driven model or QXO’s aggressive roll-up playbook — promises the most value and strategic fit for GMS’s contractor base. 

A decision is expected once the GMS board completes its due diligence process.