Jacobs' QXO acquires Beacon in first step to build $50 billion revenue powerhouse

Investing.com -- Brad Jacobs’ QXO Inc (NYSE:QXO) landed its first big fish on Thursday.

After several months of back-and-forth, the shell-like QXO announced a definitive agreement to acquire Beacon Roofing Supply (NASDAQ:BECN) for $124.35 per share in cash, or $11 billion including debt.

The deal establishes QXO as a leader in the $800 billion building products distribution industry.

In 2024, Beacon reported a record $9.77 billion in revenue and adjusted net income of $456.1 million.

QXO sees this as the first of many acquisitions, and the company has an ambitious goal of $50 billion in revenue over time.

The playbook is not new for Jacobs. 

At XPO, for example, after acquiring Norbert Dentressangle and Con-way in 2015, Jacobs and XPO doubled each of their profits between 2015 and 2018.

“We see similar opportunities with Beacon,” a QXO spokesperson told Investing.com.

QXO highlighted that Beacon is levered to big secular growth themes, which attracted them to the industry.

Beacon's business is 80% Repair&Remodeling, a stable and essential sector driven by the non-discretionary need to replace aging roofs. With commercial buildings averaging over 50 years old, homes over 40, and a 4-million-home shortage, new construction demand is rising. Additionally, North America requires $2 trillion for infrastructure repairs over the next two decades. Further, since Beacon's business is domestically sourced and sold, tariff risks are minimal.

QXO had about $5 billion in cash on its balance sheet as of the end of the year and, earlier this week, raised another $830 million via a private placement of common shares.

Oppenheimer analyst Scott Schneeberger views Beacon as an “attractive asset for QXO to implement its ambitious organic/acquisitive growth strategy.” The analyst sees the company adding “significant value” operating Beacon.

Shares of QXO are 2.4% higher in mid-day trading Thursday following the deal.