QXO has increased its $1.2 billion equity raise by another $1.8 billion, bringing its newly acquired war chest to $3 billion. It’s using the money for acquisitions, with the company saying it has seven targets in mind in North America and Europe.
The placement was oversubscribed, with the new $1.8 billion coming from a mix of mutual funds, sovereign wealth funds, large family offices, blue-chip institutional pension plans and insurance companies including Apollo, Temasek, PGIM (formerly known as Prudential), Morgan Stanley Investment Management (MSIM), Iconiq (multifamily office that manages the money of Mark Zuckerberg, Sheryl Sandberg and other wealthy west coast investors), AllianceBernstein, Liberty Mutual, Clearbridge Investments, and two large Canadian pension funds, BCI (British Columbia Investment Management Corp.) and AIMCO (Alberta Investment Management Corp.).
A person familiar with the investment said QXO is in “advanced stages” of completing another significant acquisition. The company is in “serious” discussions with seven companies at “attractive valuations.” The potential buys are a mix of “mid-sized” deals for companies with between $1 billion and $5 billion in revenue, and deals QXO considers “transformational.”
The deals are based in North America and Europe, the person said. Several of the targets are private companies, and some are family-owned businesses. The chance of a deal being announced in the coming weeks is “high.”
The person further said that a weaker macroeconomic environment is increasing the number of attractive M&A opportunities at attractive valuations.
“Under the investment agreement, the investors have committed to purchase the new convertible preferred stock to fund one or more qualifying acquisitions through July 15,” the company said in a statement. “This commitment will be extended up to an additional 12 months if a definitive acquisition agreement is executed before the initial commitment period expires.”
In March of last year, QXO acquired Beacon Roofing Supply in a $11 billion cash deal, making it the largest publicly traded distributor of roofing, waterproofing, and complementary building products in North America.
The new convertible preferred stock is perpetual, will pay a preferred dividend rate of 4.75% per annum, and can be converted into shares of the company’s common stock at an initial conversion price of $23.25 per share. The company’s shares closed the year at $19.72.
