QXO proposes to acquire Beacon Roofing Supply for $124.25 per share, valuing the deal at $11 billion.
Quiver AI Summary
QXO, Inc. has submitted a proposal to acquire Beacon Roofing Supply, Inc. for $124.25 per share in cash, representing a total transaction value of about $11 billion and a 37% premium based on Beacon's recent trading averages. QXO's CEO, Brad Jacobs, expressed frustration at Beacon's Board for not engaging with QXO regarding the offer, despite multiple attempts to initiate discussions. He emphasized that the cash offer provides Beacon shareholders with an opportunity to evaluate a compelling premium amidst a deteriorating market environment. QXO claims to have the necessary financial resources to proceed with the acquisition swiftly and has indicated readiness to negotiate definitive agreements. Additionally, QXO warns that Beacon's current performance and trading multiples suggest its Board has not optimized shareholder value. QXO intends to follow up by appealing directly to Beacon's shareholders if the Board continues to reject negotiations.
Potential Positives
- QXO has proposed an all-cash offer of $124.25 per share for Beacon Roofing Supply, representing a significant premium of 37% above Beacon's 90-day unaffected volume-weighted average price.
- The proposal has the potential to create immediate value for Beacon shareholders, as indicated by the compelling nature of the offer compared to Beacon's historical trading prices.
- QXO is financially prepared for the acquisition, with approximately $5 billion in cash and secured financing commitments, indicating its capability to complete the transaction without contingencies.
- There is an indication of QXO's commitment to advancing the proposal, as they are prepared to move quickly to finalize negotiations and may present the offer directly to Beacon's shareholders if the Board does not engage substantively.
Potential Negatives
- Potential negative perception among shareholders due to the company’s public contention with Beacon Roofing's Board of Directors, which may affect QXO's reputation and relationships in the industry.
- Concerns regarding QXO's ability to execute the acquisition effectively, given its lack of prior experience in the roofing sector, which might lead to skepticism from investors and stakeholders.
- Highlighting Beacon's failure to optimize shareholder value could backfire, leading to further scrutiny of QXO's own operational effectiveness and strategic decisions.
FAQ
What is QXO proposing to acquire Beacon Roofing Supply for?
QXO has proposed to acquire Beacon Roofing Supply for $124.25 per share in cash.
What premium does QXO's offer represent for Beacon shareholders?
The offer represents a 37% premium above Beacon's 90-day unaffected volume-weighted average price of $91.02.
Why is QXO interested in acquiring Beacon Roofing Supply?
QXO believes that acquiring Beacon will provide significant immediate value and compelling returns for its shareholders.
Who is advising QXO on this acquisition proposal?
Morgan Stanley & Co. LLC is acting as financial advisor to QXO, with legal counsel provided by Paul, Weiss, Rifkind, Wharton & Garrison LLP.
How is QXO prepared to finance the acquisition of Beacon?
QNQ has secured financing commitments and has approximately $5 billion in cash to fund the acquisition.
Disclaimer: This is an AI-generated summary of a press release distributed by GlobeNewswire. The model used to summarize this release may make mistakes. See the full release here.
$QXO Insider Trading Activity
$QXO insiders have traded $QXO stock on the open market 2 times in the past 6 months. Of those trades, 0 have been purchases and 2 have been sales.
Here’s a breakdown of recent trading of $QXO stock by insiders over the last 6 months:
- PARTNERS, LP MFN has traded it 2 times. They made 0 purchases and 2 sales, selling 7,795,894 shares.
To track insider transactions, check out Quiver Quantitative's insider trading dashboard.
Full Release
GREENWICH, Conn., Jan. 15, 2025 (GLOBE NEWSWIRE) -- QXO, Inc. (Nasdaq: QXO) today announced that it has made public a proposal to the Board of Directors of Beacon Roofing Supply, Inc. (Nasdaq: BECN) to acquire all outstanding shares of Beacon for $124.25 per share in cash. The proposal implies a total transaction value of approximately $11 billion and a 37% premium above Beacon’s 90-day unaffected volume-weighted average price of $91.02.
“Our all-cash offer provides compelling value. We believe Beacon shareholders have a right to evaluate our proposal, despite the attempt by Beacon’s Board of Directors to withhold it from them,” said Brad Jacobs, chairman and chief executive officer of QXO.
Morgan Stanley & Co. LLC is acting as financial advisor to QXO, and Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as legal counsel.
QXO sent the following letter to Beacon’s chairman today regarding the proposal:
Attention:
Stuart A. Randle, Chairman of the Board
January 15, 2025
Dear Stuart,
I am writing to reiterate our surprise at your continued refusal to substantively engage with us on our offer to acquire Beacon for $124.25 per share in cash, submitted to the company in a letter on November 11, 2024. We presented a full and compelling price that is very close to the highest end of our value range. The Beacon Board of Directors appears to have priorities that do not include capturing a compelling premium and creating significant, immediate value for Beacon shareholders.
Despite your Board’s opposition, QXO today remains committed to acquiring Beacon at $124.25 per share. We know Beacon and have studied it closely. We have retained consultants and financial and legal advisors, secured committed financing, and are prepared to nominate directors to the Beacon Board.
We believe your shareholders have the right to evaluate our proposal.
1.
More than Five Months of Anti-Shareholder Actions Designed to Frustrate a Transaction
Since our initial virtual meeting with your CEO in July of last year, Ihsan Essaid, QXO’s Chief Financial Officer, and I have made numerous attempts to engage constructively with Beacon to reach a deal. Our attempts to explore a transaction have been met by delays, cancellations, and unreasonable preconditions, notably a long-term “standstill” that would have prohibited us from offering our proposal directly to your shareholders. And while you told us in early December that you have put the company up for sale by contacting other potential buyers, we have yet to receive a counteroffer from you and are aware of no other interested buyers.
Earlier this month, you finally suggested an in-person meeting, but only after we informed you that we were prepared to approach your shareholders directly. However, this meeting was conditioned on an unusual, onerous standstill structure that would require us to agree to a months-long delay before we could actually present our proposal to your shareholders or even inform them of it. We were surprised that you conditioned a meeting on us agreeing not to tell your shareholders about a proposal to acquire their company.
2.
Our $124.25 Offer is Extremely Compelling and Higher than Beacon’s Shares Have Ever Traded
Our cash-certain proposal of $124.25 represents a very high premium to Beacon’s historical multiple, unaffected trading price, analyst targets and intrinsic value, and is significantly higher than the stock’s current affected price.
Specifically, QXO’s proposal represents a:
26% premium to Beacon’s unaffected price of $98.75 per share (as of November 15, 2024, the last trading day prior to the Wall Street Journal report that QXO had made an offer to acquire Beacon);
37% premium to Beacon’s 90-day unaffected VWAP of $91.02 per share;
17% premium to Beacon’s unaffected all-time high price of $105.84;
14% premium to Beacon’s stock price of $108.85 on January 14, 2025, which is affected by the Wall Street Journal report on November 18, 2024;
3.0x premium to Beacon’s unaffected three-year historical average next-twelve-months enterprise value to EBITDA multiple of 8.1x.
3.
Deteriorating Operating Environment and Capital Markets Backdrop
As we recently highlighted to you,
the attractiveness of our offer has greatly improved for Beacon shareholders since we made our proposal on November 11, 2024
, as the operating environment and capital markets have weakened, increasing the risk to Beacon’s plan:
Interest rates have increased significantly since late November (e.g., the yield on US ten-year bonds has increased by 61 bps);
Peers you include in your proxy are off substantially since November 11, reflecting a consensus of growing uncertainty; the median stock price among your proxy peers is down 10%, and the median building products subset within this group is also down 10%; the S&P 1500 Trading Companies & Distributors Index cited in your proxy is down 11%;
Even after the leak, Beacon shares have settled well below our offer price to $108.85 as of January 14, 2025;
Despite the foregoing, QXO has not lowered its offer of $124.25 per share in cash.
4.
Beacon Has Failed to Optimize Value for Shareholders
Beacon has reported a revenue CAGR of 8% from 2019-2023, trailing all of the building products peers from the group cited in your proxy;
Consensus forecasts currently expect Beacon to fall short of key elements of your Ambition 2025 plan. Notably, consensus calls for 2025 EBITDA margin of 9.8%, versus your plan’s target of 11%;
Beacon’s balance sheet lacks the capacity to pursue transformational M&A;
Beacon does not have diversified operations and exposure to high-growth categories that trade at higher multiples;
As a result,
Beacon’s trading multiple has remained range-bound for the better part of a decade, and its valuation trend has lagged peers
. Beacon’s unaffected EV/ NTM EBITDA multiple stood 4.1x below the subset of building products peers in its proxy, a 30% discount. This has widened out from an average 2.8x gap, representing a 23% average discount over the preceding five years.
5.
Strong Proposal
Our proposal contains no financing contingency. We have approximately $5 billion of cash on hand and have secured financing commitments sufficient to pay 100% of the purchase consideration, any required refinancing of Beacon’s debt, and associated transaction fees and expenses. Your advisor, J.P. Morgan, rightly indicated to our bankers that Beacon does not question our ability to finance the acquisition.
As QXO does not currently have operations in roofing, the transaction should not, in our opinion, give rise to any significant antitrust or other regulatory issues.
6.
Ready to Move Quickly
We are prepared to move promptly to negotiate definitive acquisition documentation. Your long history as a public company provides us and your shareholders with the information needed to form a view of intrinsic value. QXO stands ready to bring an acquisition to fruition. We have retained Morgan Stanley as our lead financial advisor; Paul, Weiss as our legal counsel; Innisfree as our proxy solicitor; and Gladstone Place Partners as our strategic communications firm.
7.
Overview
of
QXO
As you are well aware, QXO is a public company with a business plan supported by our investors to acquire businesses like Beacon. We have the full support of our Board of Directors to pursue this transaction. Our leadership team has a long track record of building businesses and accelerating growth through investment in technology.
The teams I’ve led have built five multibillion-dollar, publicly traded companies prior to QXO, including XPO, Inc. (NYSE: XPO), one of the largest providers of less-than-truckload services in North America; GXO Logistics, Inc. (NYSE: GXO), the largest pure-play contract logistics provider in the world; RXO, Inc. (NYSE: RXO), a leading tech-enabled freight brokerage platform; United Rentals, Inc. (NYSE: URI), the world’s largest equipment rental company; and United Waste Systems, Inc., the fifth largest waste management company in the U.S. at the time of its sale. Each of these companies has a history of retaining and attracting world-class talent, establishing advantages through technology, and building scale through accretive M&A and organic growth.
Our team is highly experienced, with a track record of creating shareholder value and deep expertise in operations, technology and M&A. Please refer to our website for the biographies of our senior management team (
https://www.qxo.com/team
).
8.
Conclusion
QXO has proposed to acquire Beacon for $124.25 in cash per share, a compelling price for your shareholders that delivers a significant, immediate premium. QXO has the necessary financial resources, transaction experience and institutional knowledge to consummate the proposed transaction expeditiously and with a high level of certainty upon reaching a definitive agreement. We are available to meet at short notice to get a deal done. If that does not happen, we intend to let your shareholders decide whether they want our compelling offer.
On behalf of QXO, thank you for your consideration.
Sincerely,
Brad Jacobs
Chief Executive Officer
cc: Ihsan Essaid, Chief Financial Officer, QXO
Julian Francis, CEO, Beacon
About QXO
QXO provides technology solutions, primarily to clients in the manufacturing, distribution and service sectors. The company provides consulting and professional services, including specialized programming, training and technical support, and develops proprietary software. As a value-added reseller of business application software, QXO offers solutions for accounting, financial reporting, enterprise resource planning, warehouse management systems, customer relationship management, business intelligence and other applications. QXO plans to become a tech-forward leader in the $800 billion building products distribution industry. The company is targeting tens of billions of dollars of annual revenue in the next decade through accretive acquisitions and organic growth. Visit
QXO.com
for more information.
Cautionary Statement Regarding Forward-Looking Statements
The information herein contains forward-looking statements. Statements that are not historical facts, including statements about beliefs, expectations, targets and goals are forward-looking statements. These statements are based on plans, estimates, expectations and/or goals at the time the statements are made, and readers should not place undue reliance on them. In some cases, readers can identify forward-looking statements by the use of forward-looking terms such as “may,” “will,” “should,” “expect,” “opportunity,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “target,” “goal,” or “continue,” or the negative of these terms or other comparable terms. Forward-looking statements involve inherent risks and uncertainties and readers are cautioned that a number of important factors could cause actual results to differ materially from those contained in any such forward-looking statements. QXO, Inc. (“QXO”) cautions that forward-looking statements should not be relied on as predictions of future events, and these statements are not guarantees of performance or results. Forward-looking statements herein speak only as of the date each statement is made. Neither QXO nor any participant in the proxy solicitation undertakes any obligation to update any of these statements in light of new information or future events, except to the extent required by applicable law.
Certain Information Concerning the Participants
QXO and the other participants intend to file a preliminary proxy statement and accompanying WHITE universal proxy card with the Securities and Exchange Commission (the “SEC”) to be used to solicit proxies for, among other matters, the election of its slate of director nominees at the 2025 annual meeting of stockholders of Beacon Roofing Supply, Inc., a Delaware corporation (“Beacon”).
The participants in the proxy solicitation are anticipated to be QXO, Brad Jacobs, Ihsan Essaid, Matt Fassler, Mark Manduca and the individuals nominated by QXO (the “QXO Nominees”), however, the QXO Nominees have not been determined as of the date of this communication. As of the issuance of this communication, none of the participants that have been identified beneficially own any shares of Beacon common stock. Additional information regarding the direct or indirect interests, by security holdings or otherwise, of such participants will be included in one or more proxy statements or other documents filed with the SEC if and when they become available.
Important Information And Where To Find It
QXO strongly advises all stockholders of Beacon to read the preliminary proxy statement, any amendments or supplements to such proxy statement, and other proxy materials filed by QXO with the SEC as they become available because they will contain important information. Such proxy materials will be available at no charge on the SEC’s website at www.sec.gov. In addition, the participants in this proxy solicitation will provide copies of the proxy statement, and other relevant documents, without charge, when available, upon request. Requests for copies should be directed to the participants’ proxy solicitor.
Media Contacts
Joe Checkler
joe.checkler@qxo.com
203-609-9650
Steve Lipin/Lauren Odell
Gladstone Place Partners
212-230-5930
Investor Contacts
Mark Manduca
mark.manduca@qxo.com
203-321-3889
Scott Winter / Jonathan Salzberger
Innisfree M&A Incorporated
212-750-5833
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
