QXO Inc. has acquired Beacon Roofing Supply in an $11 billion cash deal.
Why it matters: QXO has promised to shake up the $800 billion building materials industry with its massive war chest and ambitious plans, and this is the first deal for chief executive officer Brad Jacobs under the QXO banner. The deal turned hostile earlier this year, but a recent sweetening offer of an additional 10 cents a share seems to have put things over the top.
“QXO’s acquisition of Beacon is important,” said Todd Tomalak, Zonda’s building product expert. “Ahead of this announcement, our research revealed channel shifts were already occurring among builders and pro contractors, and adding QXO to the mix may accelerate this process further. We think this is much larger than roofing in future years."
- The boards of directors of both companies have unanimously approved the transaction, which values Beacon at approximately $11 billion, including all its outstanding debt.
- The transaction is expected to close by the end of April.
- The acquisition has received antitrust clearance in the U.S. and Canada.
What is Beacon?
- The construction supply company has 8,000 employees in the U.S. and Canada and is the No. 2 player in roofing distribution, which has a $55 billion total addressable market.
- 80% of Beacon's business is repair and remodeling, which is highly stable, non-discretionary, and less cyclical. Replacing a leaking or damaged roof is a necessity, not a decision.
- The average commercial building is over 50 years old; the average home is over 40 years old, and a shortage of 4 million homes need to be built. So lots of new construction is coming.
- There's a significant need for infrastructure repair across North America and Europe. In North America alone, an additional $2 trillion of spending will be required to keep the infrastructure safe over the next two decades.
- This business is primarily “made in the USA, sold in the USA,” so the tariff risk is minimal.
What they’re saying
“Acquiring Beacon is a key milestone in our plan to create substantial shareholder value and establish QXO as a leader in the $800 billion building products distribution industry,” said Jacobs. “We will apply our proven playbook to a platform ripe to deliver above-market organic growth and significant margin expansion.”
Stuart Randle, Beacon’s chairman, said, “Since QXO made its initial offer last November, we have evaluated strategic alternatives to enhance value for all of our shareholders. Following our Board’s comprehensive review, we concluded that this transaction is in the best interests of Beacon and its shareholders given the immediate premium and certainty of value in cash it offers, particularly in an uncertain environment.”
Julian Francis, president and chief executive officer of Beacon, said, “Since the launch of Ambition 2025 three years ago, we successfully transformed Beacon, delivering superior financial and operational results. We have a highly differentiated business with multiple paths to success, margin expansion, and value creation, and thanks to the incredible talent and dedication of our employees, I know Beacon has a bright future ahead. We will now enter a new chapter of growth, true to our mission to help our customers build more.”
