Kodiak acquired by QXO: a strategic $2 billion-plus leap in building products
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.
More articles by John Kingston
Werner settlement ready to go in drivers’ lawsuit that dates to 2014
Amazon’s LTL offering reaching out to shippers as possible customers: report
Wall Street reacts to Proficient’s earnings: a 25% stock decline
The post Kodiak acquired by QXO: a strategic $2 billion-plus leap in building products appeared first on FreightWaves.
Content Original Link:
" target="_blank">
