Investing.com -- Fresh off its upsized $3 billion capital raise, Brad Jacobs-led QXO Inc (NYSE:QXO) is just weeks to months away from announcing a significant new acquisition, according to people familiar with the matter.
QXO is in late-stage talks with seven potential takeover targets, the people added. The potential deals range from mid-sized businesses with $1 billion to $5 billion in annual revenue to a transformational transaction involving a company with more than $5 billion in revenue, it was relayed. Several of the targets are private, family-owned businesses in both the U.S. and Europe.
One caveat of the recently raised funds is that QXO must complete at least one acquisition by July 15, 2026. That may not prove to be a major hurdle, as people say the company is already prepared to digest a second — and possibly a third — acquisition, following its successful $11 billion purchase of roofing supplier Beacon last year.
The recent financing brings QXO’s dry power to roughly $10 billion, according to Morgan Stanley analyst Christopher Snyder. The equity raise was led by Apollo and Temasek, and also included PGIM, Morgan Stanley Investment Management, Iconiq, AllianceBernstein, Liberty Mutual, ClearBridge Investments, BCI, and AIMCo, the sources said.
While the identities of QXO’s potential targets could not be learned, one name that continues to surface is Builders FirstSource Inc (NYSE:BLDR). An event-driven analyst who tracks board nomination windows noted that both of QXO’s targets last year, Beacon and GMS, were approached shortly after their nomination windows opened. Builders FirstSource’s nomination window opens on January 27, although its staggered board could limit the effectiveness of a proxy fight. QXO ultimately acquired Beacon after an initial hostile bid, but lost out to Home Depot in the contest for GMS.
Two other public company names that have been mentioned are ADI Global Distribution, which is being spun out of Resideo Technologies Inc (NYSE:REZI), and Core & Main Inc (NYSE:CNM).
Among the private companies being discussed as possible targets are White Cap Construction Supply, US LBM, and 84 Lumber.
Analysts are bullish on the prospects of a new takeover for QXO.
Snyder notes the M&A pipeline is the largest driver for the stock. "... the now increased dry powder allows for bigger deals which in turn will bring down QXO valuation and more than offset any dilution from the transaction," the analyst stated. "As capital is deployed, QXO valuation steps lower and bigger deals mean more significant compression," he added. Snyder rates the stock an Overweight with a $35 price target.
