Inside Home Depot’s $4.3 billion pivot toward the professional trade

• In today’s CEO Daily: Phil Wahba on Home Depot’s $4.3 billion acquisition of  GMS.
• The big story: Trump’s 50% tariff on copper is a real thing.
• The markets: Mostly up, especially Bitcoin.
• Analyst notes from Wedbush on Apple and Perplexity, and Pantheon and Bernstein on copper tariffs.
• Plus: All the news and watercooler chat from Fortune.

Good morning. The retail landscape is littered with failed M&A deals. Lowe’s spent years pursuing Canadian retailer Rona to get a foothold north of the border, only to sell it off two years ago, losing about $2 billion in the process. Tapestry’s acquisition in 2017 of Kate Spade, whose sales fell 13% last quarter, has led to a number of write-downs. Capri Holdings recently sold Versace at a big loss. Dollar Tree said recently it was selling its Family Dollar division at a great loss.

So I noted with great interest Home Depot’s latest deal. Last week it announced one of its business units was buying building-products distributor GMS for $4.3 billion. GMS, whose name stands for Gypsum Management and Supply and which is based in Tucker, Georgia, is hardly the sexiest acquisition target. But then again, it has a wide network of 320 distribution centers catering to pros rather than the DIY crowd, whose appetite for home improvement projects seems to be plateauing. With the GMS deal, SRS will dominate the market for professional suppliers both outside the home (roofing, pool, yard) and inside (wallboard, steel framing, and ceilings), Cowen analyst Max Rakhlenko wrote in a research note. Rakhlenko praised the deal, saying it “would allow SRS to expand into additional verticals, grow market share, consolidate the industry, and meaningfully increase HD’s supply chain and distribution network.”

The deal follows Home Depot’s $18 billion acquisition last year of SRS Distribution (which is the entity actually buying GMS). That was the largest acquisition in the company’s history, aimed at helping Home Depot win a much bigger share of the mammoth professional-contractors segment. The deals together show Home Depot is making a major, thoughtful pivot in its strategy towards a lucrative new segment. Doing so in a disciplined way is a path other CEOs—who are would-be acquirers—can learn from. — Phil Wahba

Contact CEO Daily via Diane Brady at diane.brady@fortune.com

This story was originally featured on Fortune.com