QXO Inc.’s proposal to buy Beacon Roofing Supply for $11 billion is cruising toward the finish line after the company added a dime per share to its outstanding offer.

WHY IT MATTERS: QXO has been engaged in a months-long hostile battle for Beacon, the largest publicly traded distributor of roofing, waterproofing, and related exterior products in the United States and Canada. The deal has turned friendly, making a takeover much more likely.

  • The deal values Beacon at $124.35 a share, a 37% premium to its recent trading averages and 10 cents per share more than it had offered. Beacon has repeatedly rejected the deal.
  • Competition watchdogs in both countries have already approved the deal.
  • Both companies are now at the table and negotiating a deal. There are, of course, no guarantees.

WHAT THEY'RE SAYING: "We’re highly confident that the playbook we’ve used in the waste management, rental equipment and transportation business is completely applicable to Beacon. At XPO, for example, after acquiring two very large companies in 2015 - Norbert Dentressangle and Con-way - we integrated both simultaneously into a cohesive, global organization and doubled each of their profits between 2015 and 2018. We think there are similar opportunities here," a QXO spokesperson said.

"Beacon is levered to the big secular growth themes of why we got into this industry. The average commercial building is over 50 years old, the average home is over 40 years old and there is a shortage of 4 million homes that need to be built. Plus, 80% of Beacon's business is Repair & Remodeling, which is highly stable, non-discretionary and less cyclical. Replacing a leaking or damaged roof is a necessity, not a decision. This is primarily a 'made in the USA,' 'sold in the USA' business. The tariff risk is minimal."

Zonda principal Todd Tomalak notes similarities between the Home Depot’s acquisition of SRS Distribution in 2024, QXO’s proposal, and the underlying importance of roofing in the building products space.

"Buckle up. This potential purchase of Beacon by QXO is just the beginning of a larger strategic sequence which may bring a new major player to building products distribution."

GO DEEPER: According to CEO Brad Jacobs, QXO has approximately $5 billion of cash on hand and has secured financing commitments sufficient to pay 100% of the purchase consideration. Morgan Stanley is acting as QXO’s financial advisor, and Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as legal counsel.

Jacobs founded QXO in 2023 to create a market leader in building product distribution. The company expects to begin trading on the New York Stock Exchange on Jan. 17. The company identifies the building products distribution industry’s “nascent use” of technology, AI, and B2B e-commerce as a “compelling opportunity” for QXO as a technology-forward operation.

The company said it picked the building products distribution industry for its first acquisition because:

  • It's a large growing industry.
  • It's an $800 billion market in an industry where bigger is better.
  • It's fragments, with 20,000 players (7,000 in North America, 13,000 in Europe).