Beacon Roofing Seeks Potential Rivals to QXO Takeover Bid
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Beacon Roofing Supply has started soliciting interest from potential buyers as it looks to fend off an $11 billion takeover bid from rival QXO Inc., people familiar with the matter said.
Herndon, Va.-based Beacon is seeking to gauge interest from strategic and private equity suitors after QXO’s unsolicited approach was revealed this month, according to the people. Beacon has rejected QXO’s offer of $124.25 a share in cash, saying it undervalues the company.
Beacon ranks No. 63 on the Transport Topics Top 100 list of the largest private carriers in North America and No. 8 on the building materials carriers sector list.
QXO said previously that Beacon had been seeking to attract another suitor but that no counteroffer had emerged. Beacon had not engaged with other potential bidders as it weighed entering talks with QXO, the people said, asking not to be identified discussing confidential information.
Deliberations are in the early stages, and there’s no certainty that they’ll lead to any other offers for Beacon, the people said. Representatives for Beacon and QXO declined to comment.
Beacon provides commercial and residential roofing, siding, windows, decking, insulation, specialty lumber, waterproofing and air-barrier systems to the North American building industry. Beacon’s shares, which rose as much as 3% on Jan. 24, closed up 1.6% to $118.42 in New York, giving the company a market value of about $7.3 billion.
In a Jan. 15 letter to Beacon’s board, QXO said the target had been trying to frustrate a deal with “delays, cancellations and unreasonable preconditions.” In response, Beacon said it had offered QXO multiple chances to engage after receiving the bid in November. The company is scheduled to hold an investor day on March 13, when it plans to provide long-term financial targets and map out the next chapter of its growth.
QXO, a building products company run by veteran dealmaker Brad Jacobs, is on the lookout for a sizable acquisition. Last year, it made a 7.6 billion euro ($8 billion) offer to acquire Rexel SA, only to walk away after being rebuffed by the French electrical supplies provider. Jacobs is executive chairman of XPO and non-executive chairman of RXO and GXO Logistics.
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While QXO is prepared to nominate directors to Beacon’s board to push through a deal, it could yet face some competition. Stifel Financial Corp. analysts wrote in a recent note that they saw “real potential for a competing strategic offer” for Beacon. They cited Lowe’s Cos. as “the most compelling candidate.”
Any transaction would follow last year’s move by Lowe’s rival Home Depot, which agreed to a deal to acquire Beacon competitor SRS Distribution for more than $18 billion.
Home Depot ranks No. 50 on the private TT100 and No. 23 on the wholesale/retail carriers sector list. Lowe’s is No. 15 on the wholesale/retail list. SRS is No. 6 on the building materials list.
