Al Root
Shares of Beacon Roofing Supply rose Monday after an unwanted deal appears to be turning into a wanted transaction.
Beacon stock was up 8.5% at $120.51 after Beacon and QXO confirmed merger talks that valued Beacon, a wholesale distributor of roofing and complementary building products, at $124.35 a share.
S&P 500 and Dow Jones Industrial Average futures were down 1% and 0.9%, respectively. Most stocks were weaker after President Donald Trump wouldn't rule out a 2025 recession in a Sunday interview with Fox News' Maria Bartiromo.
QXO, a provider of technology solutions led by XPO founder Brad Jacobs, has been after Beacon for a while. In February, Beacon's board rejected an unsolicited offer of $124.25 per share in cash for the company that QXO offered in late January.
The new price is only a dime-a-share higher, but it was enough to get the two sides talking. "There can be no assurance that these discussions will result in a transaction," reads part of QXO's Monday news release.
The deal values Beacon at almost $11 billion, or about 11 times estimated 2025 earnings before interest, taxes, depreciation, and amortization, or Ebitda.
That isn't a steep multiple to pay. Industrial companies in the S&P 500 trade for closer to 15 times estimated 2025 Ebitda, according to FactSet.
Beacon is expected to grow Ebitda at about 5% a year on average for the coming three years and bottom-line earnings at closer to 8%. That's not too bad, relative to the market, but still shares trade for closer 15 times estimated 2025 earnings while the market fetches about 21 times.
Beacon management was likely to present a case for remaining a standalone company at its March 13 investor day, but that event has been postponed.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 10, 2025 09:51 ET (13:51 GMT)
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