Apollo-led investors boost QXO’s war chest as building-product deals heat up

By Anshuman Tripathy

Jan 5 (Reuters) – QXO on Monday said Apollo Global Management and others have committed $1.2 billion to the building-products distributor’s acquisition efforts, backing CEO Brad Jacobs’ efforts to tap into a wave of consolidation in the industry, sending its shares up 18%.

QXO must use the financing to fund one or more acquisitions by July 15, the companies said.

The company tried buying peer GMS for $5 billion in a hostile bid last year, which was ultimately sold to Home Depot. It, however, closed its $11 billion deal for Beacon Roofing Supply in April.

“This commitment will be extended up to an additional 12 months if a definitive acquisition agreement is executed before the initial commitment period expires,” the companies said.

QXO’s funding involves a new series of convertible perpetual preferred stock, with an initial conversion price of $23.25 per share, about 18% above its Friday close.

William Blair analyst Ryan Merkel estimates QXO has $7 billion to $8 billion of firepower, which could be stretched further on the potential for more equity raises.

“We continue to believe a lumberyard is the most likely next target.”

CEO Jacobs is often touted as an M&A guru, having built multibillion-dollar firms in logistics, waste management and equipment rentals.

“We note the Apollo partnership is building off Brad’s long-standing relationships and earlier collaborations at United Rentals,” said RBC Capital Markets analyst Mike Dahl.

Dealmaking activity in the U.S. building-products industry has accelerated as companies seek scale and local supply chains to offset tariffs, with demand supported by new housing, repair and renovation, and non-residential construction.

Last year, Commercial Metals said it would acquire concrete supplier Foley Products for $1.84 billion, while roofing-material firm TopBuild bought rival SPI for $1 billion in cash.

Jacobs stepped down as chairman at XPO and GXO Logistics in December.

(Reporting by Anshuman Tripathy in Bengaluru, additional reporting by Arasu Kannagi Basil; Editing by Vijay Kishore)