Key Points
QXO made its second large acquisition this week with the $2.25 billion buyout of Kodiak Building Partners.
The acquired company gives QXO more product diversity and greater exposure to the high-growth Florida and Texas markets.
QXO continues to eye $50 billion in revenues under its roll-up strategy in the building products distribution industry.
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Shares of QXO, Inc. (NYSE: QXO) rallied 15.6% this week through 1:35 p.m. EDT Friday, according to data from S&P Global Market Intelligence.
QXO is the building materials distribution company helmed by entrepreneur Brad Jacobs, who founded QXO in June 2024 with the strategy of acquiring building products distribution companies in order to consolidate the large and fragmented industry. It's a strategy he perfected previously in the construction equipment rental industry with United Rentals (NYSE: URI) and the logistics industry with XPO Logistics (NYSE: XPO).
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This week, QXO announced its second major acquisition as part of that effort. And while acquiring companies often go down with the announcement of a significant acquisition, in this case, investors cheered the move, given that acquisitions are a central part of QXO's strategy.
QXO buys Kodiak
On Wednesday, QXO announced the acquisition of Kodiak Building Partners for $2.25 billion, consisting of $2.0 billion in cash and 13.2 million QXO shares. What's interesting about the deal is that QXO also has the right to buy back those 13.2 million shares at $40, which is nearly double the $23.21 stock price at which QXO closed on Tuesday. That's an interesting wrinkle that gives the selling management team motivation to ensure a smooth integration, while also giving QXO the ability to limit dilution in the long run.
Kodiak is a distributor of a diverse array of building products, including lumber, trusses, windows, doors, roofing, and related fabrication and assembly services. Jacobs and his team will look to integrate the company into Beacon Roofing, QXO's first major acquisition, which closed in late April 2025. Jacobs also pointed to Kodiak's high exposure to the attractive growth markets of Florida and Texas, where it gets 40% of its sales, as a key benefit of the deal.
Image source: Getty Images.
Bet the jockey
Jacobs had a lot of success in his prior roll-up strategies, and investors who have bet on further success with QXO definitely benefited this week. While Kodiak's $2.4 billion in 2025 revenue will be a nice addition to Beacon's roughly $11 billion run-rate, Jacobs has much bigger ambitions. QXO regularly states that it is targeting $50 billion in revenues within the massive $800 billion U.S. building materials distribution industry. This week's Kodiak acquisition marked another positive step on that journey.
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Billy Duberstein and/or his clients have positions in QXO. The Motley Fool recommends XPO. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
