Brad Jacobs-Led QXO Boosts Financing Deal to $3 Billion

QXO targets a wide range of products to distribute. (QXO)

QXO Inc. is raising another $1.8 billion from investors including Apollo Global Management Inc. and Temasek Holdings Pte, comfortably more than doubling the $1.2 billion financing deal it announced last week.

The money boosts QXO’s total financing to $3 billion and will support the company’s acquisition strategy, according to a statement 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, asking not to be identified discussing confidential information. Representatives for for PGIM and Iconiq didn’t 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 is executive chairman of XPO and non-executive chairman of RXO and GXO Logistics. He has done hundreds of M&A deals in his career.  

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Jacobs 

QXO rose 1.42% to close at $25 in New York trading Jan. 9, giving the Greenwich, Conn.-based company a market value of about $17 billion. The stock has gained about 27% since announcing a financing deal on Jan. 5. 

QXO acquired Beacon Roofing Supply Inc. for $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 $50 billion-revenue company within a decade. It also tried to buy GMS Inc., which Home Depot Inc. acquired. 

Jacobs is holding talks with seven different targets, a person familiar with the matter said last week. 

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% with a conversion price of $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 $2 billion in shares to replenish its coffers following the Beacon acquisition.