Brad Jacobs’ latest venture, QXO with it plans to roll up a diffuse network of building product suppliers through acquisitions, has just armed itself with a lot more cash to do so.
At its most basic, QXO is a logistics play: put a growing amount of assets of a fragmented building supply chain ecosystem under one roof, link them through a unified supply chain and reap the benefits of that efficiency.
It now has about $1.2 billion more that it can use to complete that task, having completed 2025 with only one acquisition, the roughly $11-billion purchase of Beacon Roofing Supply.
QXO, founded by former XPO CEO Jacobs (NYSE: XPO) who is both chairman and CEO at QXO, said Monday it had secured about $1.2 billion in new financing from a group led by Apollo Global Management (NYSE: APO), a publicly-traded companywith $900 billion in assets under management.
In an interview with FreightWaves, Mark Manduca, QXO’s chief investment officer, said the other investors alongside Apollos are asset manager Franklin Templeton and two pension funds. But Apollo Management is the largest investor.
The financing comes through the sale of convertible preferred equity in the company. The plan to have it used to make QXO (NYSE: QXO) bigger was in the first paragraph of the company’s press release. “The investment further strengthens QXO’s financial flexibility in pursuing acquisition opportunities,” the prepared statement said.
Just like cash
The funds from the sale will not sit on the balance sheet as cash, Manduca said. But he added that in terms of using it to make an acquisition, it effectively serves the same role.
QXO’s balance sheet at the end of the third quarter reported cash of about $2.3 billion.
Funds from the preferred sock offering can be used to make an acquisition or multiple deals in excess of $1.5 billion before July 15, according to the terms of the transaction. If an acquisition is not made before then, the funds’ ability to be used for a purchase can be extended for a year.
The dividend rate on the preferred shares is 4.75%. They can be converted to common shares at a conversion price of $23.25/share. That would yield about 47 million new shares of QXO common stock, a small number with the company carrying 1.129 billion fully diluted shares.
QXO does not pay a dividend on its common stock.
QXO’s share price soared on the news of the Apollo-led deal. At approximately 11:30 a.m. Monday it stood at $23.26. up $3.54, a gain of 17.95%.The 52-week low for QXO was $11.85 on February 25.
QXO made a push to acquire building products distributor GMS earlier this year but lost out to Home Depot (NYSE: HD).
Plenty of capital and opportunities
Asked if a lack of capital was an issue in coming up short for GMS, and whether the investment by Apollo and others would have permitted the GMS acquisition to go the way of QXO, Manduca said QXO ultimately balked at the price paid for the company (about $5.5 billion).
“We were in a great position with capital,” Manduca said. “We’re disciplined on price. There are certain prices for certain deals in our view that strategically fit with us. Everything happens at our price.”
Manduca said QXO is “in advanced stages of completing another significant acquisition.” He added the “pipeline” for other purchases “is very, very live right now.”
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