HERNDON, Va. – Beacon (NASDAQ:BECN), a Fortune 500 distributor of specialty building products, has rejected an unsolicited acquisition offer from QXO, Inc. (NASDAQ:QXO). The November 11, 2024 offer to purchase all outstanding shares of Beacon for $124.25 per share in cash was unanimously deemed insufficient by Beacon’s Board of Directors. According to InvestingPro according to the data, QXO maintains a strong balance sheet with more cash than debt and a current ratio of 258.64, indicating great financial flexibility for potential acquisitions.
The Board, after careful consultation with independent financial and legal advisors, concluded that the proposal significantly underestimates Beacon’s growth prospects and future value creation potential. Beacon chairman Stuart Randle said the offer does not reflect the company’s strategic plan and growth potential, noting that Beacon has delivered a total shareholder return of over 200% over the past five years. This is in sharp contrast to QXO’s market performance, which InvestingPro data show that it has fallen by almost 85% over the past year, with particularly volatile stock movements.
Beacon attempted to contact QXO to discuss the assessment, subject to a standard non-disclosure agreement (NDA), which QXO declined. The company also offered a limitation on confidentiality obligations and structured an NDA to allow QXO to participate in the proxy contest at the upcoming 2025 annual meeting of stockholders.
Julian Francis, President and CEO of Beacon, expressed confidence in the company’s growth trajectory and the execution of its Ambition 2025 strategy, which aims for above-market growth and operational excellence. While QXO shows promising revenue growth potential with InvestingPro predicting growth of 92.7% for the current year, analysts do not expect profitability in the near future. Beacon expects to reveal more about its long-term financial goals at Investor Day, scheduled for March 13, 2025. Get a deeper look at both companies’ valuations and growth metrics with a subscription to InvestingPro, which offers exclusive financial health scores and in-depth analysis.
JP Morgan is acting as Beacon’s financial advisor, with Sidley Austin LLP and Simpson Thacher and Bartlett LLP serving as legal advisors. Beacon, founded in 1928, operates more than 580 branches across the US and Canada and is known for its TRI-BUILT® brand and Beacon PRO+® digital account management suite.
The company advises shareholders that no action is required at this time and plans to file relevant documents with the US Securities and Exchange Commission (SEC) for the upcoming annual meeting.
This news is based on a press release from Beacon.
In other recent news, QXO, Inc. was busy with significant developments. The company’s shareholders approved a key executive compensation plan at the 2024 annual meeting, electing all of the company’s director nominees and ratifying the appointment of Marcum LLP as the independent registered public accounting firm for fiscal year 2024. In parallel, QXO is actively seeking growth through acquisition, as as indicated in his acquisition proposal Beacon roofing Supply (NASDAQ: ), after a takeover bid was rejected Rexel (EPA:), a French distributor of electrical products.
In addition, QXO announced the appointment of Ashwin Rao as the new Chief Artificial Intelligence Officer. Rao, with more than three decades of experience in business artificial intelligence, is expected to lead QXO’s technology initiatives, including demand forecasting, inventory management and e-commerce. This move is aligned with QXO’s strategy to become a leading technologically advanced entity in the construction products distribution sector.
Goldman Sachs reiterated its Buy rating on QXO, further signaling confidence in the company’s growth prospects. However, it is important to note that these plans involve inherent risks and uncertainties and are not guarantees of future performance. These recent events reflect QXO’s current plans and expectations, highlighting a period of strategic moves and appointments.
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