Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Serial dealmaker Brad Jacobs has prevailed in a hostile $11bn takeover of a roofing supply company, which he plans to use as a vehicle for an acquisition binge with the backing of investors including President Donald Trump’s son-in-law, Sequoia Heritage and the Walton family.
Jacobs’ publicly listed investment vehicle QXO has agreed to buy Beacon Roofing Supply, the second-largest distributor of roofing tiles and equipment in the US for $11bn, including debt. The deal marks one of the year’s largest corporate takeovers in what has been a relatively quiet merger & acquisitions market.
The agreement, announced on Thursday, is the culmination of a months-long tussle between Jacobs and Beacon in which the billionaire financier had threatened to run a campaign to oust Beacon’s board of directors and take his offer directly to shareholders.
Jacobs’ QXO in January first publicly offered $124.25 per share for Beacon, a price that the target rebuffed as below its future standalone value. The price that Beacon agreed to on Thursday was just 10 cents higher than that original offer. The final price is almost a 40 per cent premium above Beacon’s share price before QXO’s acquisition interest had become public.
Jacobs has raised more than $6bn in equity from various investors including Affinity Partners, the private equity firm set up by Trump’s son-in-law Jared Kushner, to finance his takeover of Beacon and other acquisitions.
“Acquiring Beacon is a key milestone in our plan to create substantial shareholder value and establish QXO as a leader in the $800 billion building products distribution industry,” Jacobs said in a press release.
QXO has also studied a takeover of Rexel, a Paris-listed distributor of electrical supplies for homes that currently carries a market value of about $8bn. However, QXO’s initial acquisition effort last September was rejected by Rexel’s board of directors.
Jacobs, who had created multiple listed industrial consolidation “roll-up” vehicles including waste management group United Rentals and last-mile delivery group XPO Logistics, has said that Beacon, with $10bn in annual revenue, will be the first step in creating a building products supply company whose total annual revenue could reach $50bn.
Beacon had for months rebuffed Jacobs’ overture, leading QXO to launch an unsolicited tender offer in January and propose replacing the target’s entire board of directors.
The deal marks a rare all-cash, blockbuster transaction in an anaemic M&A market that has been hurt by persistently high interest rates and uncertainty stemming from Trump’s erratic economic policies.
QXO said it already had regulatory approval for the transaction in the US and Canada and could close its now friendly deal by the end of April.
If QXO completes the takeover, the company will return to the market to raise billions more in new equity financing and use Beacon as a platform to conduct more large takeovers, according to people briefed on Jacobs’ plans.
