Investing.com -- With a potential multi-billion-dollar acquisition just weeks away, Brad Jacobs–led QXO Inc. (NYSE:QXO) continues to fill its war chest.
The building products operator raised another $750 million through a common stock offering overnight. The company sold 31,645,570 shares of common stock at $23.80 per share in the offering. This is on top of the $3 billion it recently raised through a convertible preferred financing, led by Apollo Global Management and Temasek. This brings the total raised by QXO since the start of the year to $3.75 billion.
The stock offering is in response to significant inbound interest following its $3 billion raise, according to people familiar with the matter.
In addition to the stock offering, QXO issued preliminary fourth-quarter net sales results of $2.19 billion and an adjusted EBITDA of approximately $150 million. The preliminary results were below analyst estimates of $2.21 billion and $185 million, respectively.
The new capital adds to the company’s dry powder for deals, which is now estimated to total nearly $11 billion, according to some Wall Street analysts.
QXO is in late-stage discussions with seven potential acquisition targets, people familiar with the matter recently told Investing.com. The prospective deals span mid-sized businesses generating between $1 billion and $5 billion in annual revenue, as well as a more transformational transaction involving a company with more than $5 billion in revenue. Several of the targets are private, family-owned companies based in the U.S. and Europe.
Following the latest capital raise, Oppenheimer analyst Scott Schneeberger raised his price target on QXO from $27 to $30. The analyst views the news as a “positive catalyst” as it signals a deal is near. “Adding the three YTD equity raises to QXO’s existing ~$2.4B of cash, we perceive the company is able to acquire at least $500M of incremental EBITDA assuming a conservative mid-teens EV/EBITDA multiple paid,” Schneeberger commented. He added that this number could go even higher via incremental debt and/or equity issuance.
QXO has an aggressive plan to reach $50 billion in annual revenues within the next decade through acquisitions and organic growth. Last year, the company acquired Beacon Roofing Supply for $11 billion. The company also unsuccessfully attempted to acquire GMS, losing out to home improvement retailing behemoth Home Depot.
Shares of QXO last traded down 7.5% in pre-open trading to $23.18.
