QXO’s Hostile Bid for Beacon Roofing Fuels M&A Optimism
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M&A specialists are eyeing a robust list of likely U.S. takeover candidates, with a buoyant economy, strong buyer appetite and potentially looser regulatory regime under President Donald Trump all seen driving more deals in the first quarter.
That’s the finding from a new Bloomberg News survey of 15 merger-arbitrage and event-driven focused analysts, brokers and fund managers.
Beacon Roofing Supply Inc., the top takeover pick among respondents, has already seen action: rival QXO Inc., headed by Brad Jacobs, launched a hostile bid for the company on Jan. 27 after an earlier approach was rebuffed by the target. Other popular candidates include online ticket marketplace Vivid Seats Inc, biotech firm Sage Therapeutics Inc. and Lifeway Foods Inc., according to the survey, which was taken between Jan. 13 and Jan. 24.
This quarter’s survey features a bigger and broader roster of names across sectors — the largest over the past year— reflecting growing optimism within the merger-arbitrage community. Trump’s pro-business stance and appointment of new antitrust officials are key drivers of this sentiment, following a muscular antitrust agenda under former President Joe Biden.
“Regulatory headwinds are gone,” said Tom Savage, a portfolio manager at Picton Mahoney Asset Management in an interview. “Now there’s much more common sense and a business-friendly outlook.”
Savage also pointed to the greater clarity on interest rates and the broader US economy, though he cautioned that cross-border transactions may be more challenging until Trump’s tariff policies are clear.
(Bloomberg)
Takeover Battles
Herndon, Va.-based Beacon has drawn significant attention from merger investors, amid expectations for a prolonged takeover battle.
This week, QXO launched a tender offer directly to Beacon shareholders, after the board of the building-products company rejected the $124.25-a-share bid as too low. Beacon also has started soliciting interest from potential strategic buyers and private equity firms in an effort to fend off the hostile takeover, Bloomberg News reported.
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.
Analysts have identified Lowe’s Cos as a logical suitor, particularly following its rival Home Depot Inc.’s $18 billion-plus acquisition of SRS distribution Inc. Beacon’s stock closed at $119.55 Jan. 27, up more than 20% from November, when reports of potential takeover interest emerged.
Home Depot ranks No. 50 on the private TT100.
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The outcome of this situation hinges on how serious Beacon is about running a sales process, and if results in a higher competing bid, according to Kona Shio, a merger arb and event-driven specialist. While QXO’s offer price appears reasonable based on peers’ valuations, its success depends on board approval. If rejected again, QXO may pursue a proxy battle to nominate board members at Beacon’s May shareholder meeting, he said.
Uniform maker UniFirst Corp. was another standout in the survey, with eight mentions. This follows an earlier $5 billion offer from peer Cintas, which UniFirst’s board declined to engage with in the past. The biggest obstacle to a deal is UniFirst’s dual-class stock structure, which gives its founding family more than 70% of the combined voting power. Whether the unsolicited bid can secure sufficient support from the family remains unclear, making it tough for investors to assess.
More M&A may emerge. In an annual report published by KPMG in December, 54% of dealmakers said their next transaction would be in the first half of 2025 — double the percentage who expected activity in the second half.
“Clients who had began preparations last year are now working to bring those assets to market in the near future,” said Carole Streicher, head of deal advisory and strategy at KPMG in the US. “The headwinds that we’ve faced in the M&A market over the last couple of years have actually turned into tailwinds.”
