QXO, the Brad Jacobs-led company that has targeted rolling up companies in a fragmented building products industry, has made its second acquisition since it came into existence.
Wall Street immediately gave the acquisition of Kodiak from a private equity firm a gigantic round of applause: QXO (NYSE: QXO) stock rose 16.61% Wednesday, up $3.86 to $27.07. Its closing price was just under its high for the day.
Kodiak will be acquired for $2 billion in cash and 13.2 million QXO shares. When the deal was announced, the total size of the transaction was estimated by QXO to be $2.25 billion. But with the increase in the stock price today, if that were to hold the equity value of the deal would be closer to $2.35 billion.
A QXO spokesman described Kodiak as a “national distributor of essential building products, including lumber, trusses, windows and doors, construction supplies, waterproofing, and roofing, operating 110 locations across 26 states with about 5,500 employees serving more than 10,000 customers.”
Private equity firm Court Square Capital Partners is selling Kodiak to QXO. The deal is expected to close in the second quarter.
Logistics a core strategy
The basic “value prop” behind QXO’s formation after Jacobs began stepping away from LTL carrier XPO (NYSE: XPO) and its various spinoffs, such as 3PL RXO (NYSE: RXO), was that the building supply industry was highly fragmented and a ripe candidate for a rollup. At the heart of the business plan is that a successful rollup could occur not just on size alone but the more efficient logistics that would come from that.
In a research note, Wells Fargo analyst Sam Reid said of the wait for the second deal after the sole QXO acquisition so far, Beacon Roofing Supply: “We have a deal. After 40+ days of virtually non-stop speculation, there’s finally a transaction.”
The reference to 40+ days is roughly the time since QXO announced it was taking on a significant investment via a preferred share offering from a group of investors led by Apollo Management. That gave the company a much larger stockpile for making acquisitions, eventually totaling $3 billion after a second investment was announced in rapid order after the first in the early days of 2026.
QXO also had a new common stock offering last month.
Analyst assumed a non-public target would be next
Reid said discussions with QXO in recent weeks led him to conclude that the next transaction would likely be a “non-public asset, a point of consistency throughout our conversations.” He said it was also likely the acquisition target would be a company with “residential housing exposure.”
Reid, who is the senior retail hardlines analyst at Wells Fargo, said the deal “signals transactions are indeed in the works & potentially capitalizes on weak cyclical dynamics.” The reason for those possibly weak conditions, Reid said, is that 40% of Kodiak’s business is in Florida and Texas, which are “among the most challenged” residential housing markets at present. He said the purchase of Kodiak against that background is a “bold contrarian move.”
Reid wrote that QXO’s entry into the building products field inevitably led to the question among investors of “who’s next?”
That sort of speculation, he added, “has distorted public distributor multiples; to that end, today’s news should put some (albeit not all) of this to rest.”
The next target, Reid added, is still likely to be a private company, “keeping public peers off the table.”
More money available for deals
Given the money QXO has raised, Reid said the company still has about $6 billion “in acquisition powder post this transaction, leaving the door open for another few private deals in the coming months.”
In addressing the rationale for the acquisition, a QXO spokesman said Kodiak “triples QXO’s existing market opportunity and expands our total addressable market to over $200 billion, placing QXO in nearly every major building products category.”
“The acquisition moves QXO into lumber, trusses, gypsum, and construction supplies, with complementary fabrication, assembly, and installation capabilities, creating a more complete offering in exterior products and strategic entry points into interior categories and services,” he said in an email to FreightWaves.
And to the point about the QXO plan to use logistics leverage as part of the road to success, he added that “vendor overlap is significant: 16 of Kodiak’s top 20 vendors are shared with legacy Beacon.”
QXO said the deal would be immediately accretive to its earnings.
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