The battle for control over Beacon Building Supply is coming to a head as its courtier, QXO, Inc., ratchets up the pressure after publishing a letter to company shareholders on Monday that underscores the board’s tenuous position.

In an equity research report prepared on Feb. 10 by Truist Securities, the report’s author (using Beacon’s stock market ticker in place of its name) summed up the situation as such: “BECN will try to sway with analyst day projections, but bottom line [is] QXO probably wins this unless [a] ‘White Knight’ appears.”

Despite months of negotiations and speculation, no competing bids have materialized, increasing pressure on Beacon’s board to let shareholders decide the company’s future.

QXO’s CEO, Brad Jacobs, reiterated that the offer represents a substantial premium over Beacon’s historical trading prices and criticized Beacon’s management for allegedly misleading investors about the company’s valuation and financial prospects.

“Our offer is an all-time high for the stock and represents a 37% premium to Beacon’s 90-day unaffected VWAP as of November 15, 2024,” Jacobs wrote in the letter to shareholders. 

“In evaluating QXO’s offer, Beacon conveniently ignores that its share price reflects our acquisition interest following the Wall Street Journal’s November 18, 2024 report,” Jacobs wrote. 

“That day, Beacon’s stock rose 9.9%, compared to a 0.4% increase in the S&P 500,” he added. “Yet, Beacon compares QXO’s offer to share price metrics as of January 14, 2025 — a misleading approach that distorts expectations of Beacon’s standalone value. “

And, for good measure, QXO mentioned that Beacon’s Chairman Stuart Randle and CEO Julian Francis each sold significant portions of their shares at prices well below the takeover bid, with Randle selling at $94.80 per share and Francis at $97.91 per share.

“Actions speak louder than words: Beacon insiders recently sold shares at prices far below QXO’s offer,” the letter stated. “If Beacon’s future is so bright under current management, why are insiders selling shares sharply below QXO’s offer price?”

Standing Firm on (Shaky) Ground

Beacon’s board remains opposed to the acquisition, arguing that the company’s long-term growth potential outweighs QXO’s bid. 

The company is expected to present its 2028 financial projections at an analyst day next month in New York, a move some see as an attempt to reassure investors of its independent value. Yet, industry analysts remain skeptical. 

“While we believe these [projections] will be bullish, we have rarely seen long-term forecasts significantly shift sentiment in cases like this,” wrote Keith Hughes, the Truist Securities analyst, in Monday’s equity research report.

As the Feb. 24 deadline for QXO’s tender offer approaches, shareholders face a crucial decision. If no alternative bidder emerges, QXO’s strategy of nominating a slate of directors, which must be submitted by this Friday, could sway the vote in favor of the acquisition. 

“With the offer at a price level Beacon stock has never traded at, we suspect a majority of investors will vote for QXO board nominees if the process goes that far,” Hughes noted in the Truist Securities report.

The outcome of this high-stakes battle could reshape the roofing supply industry, potentially affecting contractors and distributors alike. 

Should QXO succeed, it would mark a significant shift in industry consolidation, potentially setting a precedent for further acquisitions in the building materials sector. 

In an email response to QXO, a spokesperson for Beacon wrote: 

“On multiple occasions, we have sought to constructively engage with QXO to allow them to review our 2028 long-term targets and show them a path to increased value. 

"Instead, they have refused to engage, first stating that they were not interested in receiving any confidential information and later disparaging information they have not seen.

"We look forward to sharing more about our future growth plans and 2028 long-term targets with all investors at our upcoming Investor Day.”

A QXO representative balked at the assertion Beacon sought constructive engagement without first requiring the company to sign a binding agreement restricting QXO's ability to communicate with Beacon shareholders.

"Beacon’s claim that it has been willing to engage with us is flatly false," the representative, who requested anonymity because of the issue's sensitive nature, said. 

"The company has repeatedly refused to engage unless we first sign a standstill agreement restricting our ability to communicate with shareholders," the QXO rep added. "However, that point is now moot, as we have launched a tender offer."

For now, all eyes remain on Beacon’s next move and whether that last-minute ‘white knight’ bidder will emerge to challenge QXO’s premium offer. 

Beacon, which trades on the Nasdaq, closed up $0.87 on Tuesday in light trading at $119..44. The company will release its Q4 earnings on Feb. 27.