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The 50% run-up in

Hughes Supply


since last summer proved prescient Tuesday when the construction products wholesaler was acquired by

Home Depot

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Home Depot, the Atlanta chain store whose $86 billion market cap places it with the world's biggest retailers, agreed to pay $46.50 a share for Hughes Supply, or about $3.47 billion including assumed debt. Hughes Supply's shares closed at $38.55 on Monday after steadily rising from around $26 last May on buyout speculation.

Home Depot said it will fold Hughes Supply into its Home Depot Supply unit, which sells materials to homebuilders, professional contractors, cities and maintenance professionals. Hughes Supply, with 500 outlets in 40 states, doubles the size of the Home Depot unit, giving it projected 2006 sales of about $12 billion.

The acquisition will be funded through cash on hand and underwritten debt and is expected to add to per-share earnings within the first year, Home Depot said.

"Hughes Supply's leading position in many of the professional markets will add new platforms to the Home Depot Supply portfolio, while also providing additional scale to the division's positions in water works, professional construction supply and multi-family maintenance," Home Depot said. "The combination will deliver purchasing synergies; enhance overall operating effectiveness through scale, simplification and knowledge transfer; and accelerate growth by providing professional customers exceptional value, convenience and choice."