Exclusive-Jacobs’ QXO to buy Kodiak for $2.25 billion, taking aim at Home Depot and Lowe’s, sources say

NEW YORK, Feb 11 (Reuters) – Building-products distributor QXO, led by billionaire dealmaker Brad Jacobs, has agreed to buy smaller private distributor Kodiak Building Partners for about $2.25  billion, according to two people with direct knowledge of the deal.

Jacobs, the chairman and CEO of QXO, has been trying to muscle up against retail behemoths Home Depot and Lowe’s in building products distribution.

This is QXO’s second acquisition, following last year’s $11  billion purchase of Beacon Roofing Supply, and comes after Jacobs suffered a setback when Atlanta-based Home Depot beat out his hostile takeover attempt for drywall and ceilings distributor GMS last June.  

The loss slowed Jacobs’ push to expand QXO’s roughly $5  billion annual revenue base to $50  billion, and increased pressure over his next moves.

QXO, which has a market value of more than $16  billion and distributes roofing and waterproofing materials, competes with $388  billion-valued Home Depot and $160  billion-valued Lowe’s in wholesale building materials distribution.   

The Kodiak deal is expected to be followed by additional transactions in the coming months, which could include private or public companies, one of the people said. They both spoke on condition of anonymity because the information is private.  

Kodiak declined to comment. Jacobs did not immediately respond to a request for comment.  

Jacobs’ earlier takeover efforts were backed by investors including Affinity Partners – the investment firm founded by Jared Kushner, U.S. President Donald Trump’s son-in-law – as well as Sequoia Heritage, according to prior disclosures.

BEYOND ROOFING

QXO and Kodiak share many of the same suppliers – 16 of Kodiak’s top 20 vendors already supply QXO – allowing the acquirer to expand purchasing scale and sell a wider range of products to the same customers, the people said.

Jacobs has said he intends to apply artificial intelligence to forecast demand and manage inventory more precisely at QXO, aiming to cut costs and improve profitability.

Though QXO and Kodiak operate in the same sector, they distribute different products.

The acquisition moves QXO beyond roofing and waterproofing into lumber, trusses, gypsum and broader construction supplies — categories central to large homebuilders and regional contractors. Kodiak also offers in-house fabrication and installation services, according to its website.

Under the terms of the deal, QXO will pay $2  billion in cash and issue 13.2  million QXO shares to Kodiak’s owners, retaining an option to repurchase those shares at $40 each, the person said.

Kodiak has about $2.4  billion of annual revenue, operates 110 locations across 26 states and employs about 5,500 people, its website says.

QXO is paying an enterprise value equivalent to roughly 10.7 times Kodiak’s projected 2025 earnings before interest, taxes, depreciation and amortization and about 0.95 times sales, according to the people with knowledge of the deal. 

The deal comes as high U.S. mortgage rates continue to weigh on new home construction and large repair and renovation projects, but distributors are positioning for a rebound as interest rates are expected to decline.

QXO has recently gained extra cash on hand and borrowing room to fund acquisitions, including a $3  billion convertible preferred financing led by Apollo and Temasek.

Over the past two years, consolidation in building products distribution has accelerated.

Home Depot bought SRS Distribution for about $18.25  billion in 2024 and later agreed to acquire GMS via SRS. Lowe’s countered with its $8.8  billion purchase of Foundation Building Materials and an earlier acquisition of Artisan Design Group. 

(Reporting by Sabrina Valle in New York; Editing by Dawn Kopecki and Jamie Freed)