Keep pulling the thread on Brad Jacobs.
QXO has announced a deal to acquire TopBuild for $17 billion.
The acquisition of TopBuild is expected to make QXO the second-largest publicly traded building products distributor in North America.
Following its acquisitions of Beacon, Kodiak, and TopBuild, QXO expects to have more than $18 billion in combined company revenue and over $2 billion in combined adjusted EBITDA.
Upon completing the merger with TopBuild, QXO will hold the number one market position in insulation and waterproofing, the number two position in roofing, and a top-two position in lumber and building materials in certain geographies.
Since its founding approximately two years ago, QXO has raised about $15 billion in capital.
The $17 billion acquisition of TopBuild is structured with approximately 55% in QXO stock and 45% in cash.
QXO is paying 14.9 times TopBuild's projected 2025 EBITDA before synergies and approximately 11.8 times post-synergies.
TopBuild currently derives a single-digit percentage of its revenue from data center projects, but this segment is growing very rapidly.
TopBuild's business model involves purchasing insulation from manufacturers and then either reselling it to contractors or performing the installation itself.
The majority of insulation and roofing products sold in the United States are manufactured domestically due to differing regulations and building codes between countries.
Brad Jacobs characterized the business environment for QXO's building materials distribution business as "super soft" over the past year due to weak overall construction demand.
QXO secured debt financing commitments for the TopBuild deal from Morgan Stanley, Wells Fargo, and Barclays within approximately one week.