QXO is back on the hunt for a new acquisition to expand its portfolio after locking down $1.2 billion through a series of funds managed by Apollo Global Management.
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 deals are a mix of “mid-sized” deals for companies with between $1 billion and $5 billion in revenue, and deals QXO considers “transformational,” companies with revenue between $5 billion and $20 billion.
The person further said 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, QXO acquired Beacon Roofing Supply in an $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.
“Within the past 30 days, QXO CEO Brad Jacobs released a new book ‘How to Make a Few More Billion Dollars‘, held a major press event with CNBC at the New York Economic Club, and now secured funding with Apollo for added opportunities,” said Zonda’s principal, building products and remodeling Todd Tomalak. “At the same time, QXO also faces a very different demand environment for housing and renovation than the prior 18 months, which opens up opportunities more broadly. We are watching closely with interest.”
