QXO secures US$1.8 billion financing led by Temasek, Apollo amid building products consolidation
The funds lift total financing to US$3 billion and will back the company’s acquisition strategy
[NEW YORK] QXO is raising another US$1.8 billion from investors including Apollo Global Management and Temasek Holdings, comfortably more than doubling the US$1.2 billion financing deal it announced last week.
The money boosts QXO’s total financing to US$3 billion and will support the company’s acquisition strategy, according to a statement on Monday (Jan 12) that confirmed a Bloomberg News report.
Other investors including PGIM and Iconiq Capital are joining the Apollo-led consortium, a person familiar with the matter said.
Representatives for PGIM and Iconiq did not immediately respond to requests for comment.
The increased financing underscores institutional investors’ confidence in QXO CEO Brad Jacobs, the serial dealmaker who set up the company about three years ago to roll up the building products sector after successful consolidation plays in the logistics and waste-management industries, among others. He has done hundreds of M&A deals in his career.
Shares of QXO, which rose as much as 5 per cent on Monday, closed down 0.8 per cent to US$24.80 in New York trading, giving the Greenwich, Connecticut-based company a market value of about US$16.7 billion. The stock has gained about 26 per cent since announcing a financing deal on Jan 5.
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QXO acquired Beacon Roofing Supply for US$11 billion including debt last year after winning a takeover battle. That marked QXO’s first and only acquisition so far, representing Jacobs’ first step in a plan to turn QXO into a US$50 billion-revenue company within a decade.
It also tried to buy GMS, which Home Depot acquired.
Jacobs is holding talks with seven different targets, a person familiar with the matter said last week.
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Temasek, PGIM and Iconiq are investing in QXO under the same terms as Apollo in the relatively novel deal. The investors have committed to purchase Series C preferred stock to fund one or more acquisitions by QXO by mid-July.
The new convertible preferred stock will pay an annual dividend of 4.75 per cent with a conversion price of US$23.25 per share.
QXO targets a wide range of products to distribute, including construction materials, plumbing supplies, fencing and decking, finished products such as doors and windows, and even heating and cooling equipment.
Last summer, QXO sold US$2 billion in shares to replenish its coffers following the Beacon acquisition. BLOOMBERG
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