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With both sides now firmly entrenched, the outcome of this corporate contest will depend on whether QXO can overcome Beacon Roofing’s defensive measures or if the board can secure a more favorable deal for shareholders.

The battle for control of Beacon Roofing Supply Co. — valued at $6.2 billion — is heating up, and the distributor is resisting a takeover.

On Jan. 15, QXO Inc. formally offered to acquire the company for $11 billion in an all-cash transaction. The offer of $124.25 per share represents a 37% premium over Beacon Roofing’s 90-day average share price. It also aligns with QXO’s strategy to modernize the $800 billion building products distribution sector through digital commerce. Based in Greenwich, Connecticut, QXO is a digital technology company focused on transforming traditional industries.

Why is QXO pushing for a Beacon Roofing takeover?

QXO sees substantial strategic value in acquiring Beacon Roofing, particularly for its expertise in digital commerce and growth strategies. However, Beacon Roofing’s board is resisting the takeover offer. In response, the board has enacted a “poison pill” defense strategy, which allows existing shareholders (excluding QXO) to purchase additional shares at a discount. This makes the acquisition more expensive and could deter QXO from pursuing the deal.

On Jan. 27, QXO took its next step by launching a tender offer to purchase all outstanding Beacon Roofing shares at $124.25 each. This still represents a 37% premium over Beacon’s share price from Nov. 15, 2024, with a total transaction value of approximately $11 billion. QXO plans to complete the acquisition within 20 business days, assuming it can meet regulatory approvals and other conditions.

Brad Jacobs, CEO of QXO, emphasized that the offer provides immediate value for Beacon Roofing’s shareholders at a significant premium. He also said it is in line with QXO’s vision of becoming a leader in digital commerce within the building products market.

“Beacon would be a key part of our strategy for growth,” Jacobs said.

How far will QXO go to acquire Beacon Roofing?

QXO is also prepared to take further steps to secure the deal, including nominating directors for election at Beacon’s upcoming annual meeting. The company has secured full financing commitments from major financial institutions like Goldman Sachs, Morgan Stanley, and Citi, ensuring the necessary funds to complete the transaction.

In response to QXO’s bid, Beacon Roofing’s board adopted a limited-duration stockholder rights agreement, or “rights agreement,” designed to protect shareholders and ensure any takeover offer provides fair value. The agreement gives the board time to assess QXO’s offer and explore the best options to protect the company’s interests. However, the rights agreement is not meant to block a fair offer, and Beacon’s board will issue a formal recommendation on the bid within 10 business days.

Why is Beacon Roofing fighting QXO’s acquisition?

Beacon Roofing had previously rejected QXO’s initial proposal on Nov. 11, 2024. It argued that the offer undervalued the company. The $124.25 per share offer remains unchanged from that initial proposal, which Beacon Roofing’s board had deemed inadequate.

With both sides now firmly entrenched, the outcome of this corporate contest will depend on whether QXO can overcome Beacon Roofing’s defensive measures or if the board can secure a more favorable deal for shareholders.

“We launched our all-cash tender offer to ensure that Beacon’s shareholders can take advantage of our compelling offer and get paid quickly,” said Jacobs. “We have committed financing, no due diligence conditions, and anticipate a smooth regulatory approval process. The only thing stopping shareholders from acting is the decision by Beacon’s Board to adopt a poison pill. We are prepared to take all necessary steps to complete this transaction promptly and deliver significant value to Beacon shareholders.”

QXO’s $124.25 per share offer represents a 37% premium to Beacon’s 90-day unaffected volume-weighted average price of $91.02 per share as of Nov. 15, 2024, and a 26% premium over the $98.75 price before the offer became public.

QXO’s tender offer will remain open until 12:00 midnight, New York City time, on Feb. 24, 2025. The company plans to complete the acquisition shortly after the tender expires, assuming it meets all conditions. The transaction is not subject to financing or due diligence conditions. QXO expects that regulatory waiting periods will have expired or been waived by the time the offer concludes.

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