QXO, a leading distributor of roofing products and building materials, is nearing a new acquisition as part of a plan to disrupt and consolidate the fragmented $800 billion building products industry and reach $50 billion in annual sales within about five years.
By reshaping an unconsolidated market and capturing a much larger share of distribution, QXO could gain market share from competitors, providing strategic leverage in negotiations with homebuilders. Becoming a more dominant player in the distribution of construction materials to construction sites would reduce competition and strengthen QXO’s bargaining power, margins, information and data access, and profitability.
This potential consolidation of power in the distribution of building materials would mirror a similar trend in residential construction. The big housebuilders are gradually gaining more market share in the most active housing markets, leading to greater concentration at the top of the food chain.
It is not yet clear whether QXO can carry out this consolidation play in the building materials industry. Yet founder, chairman and CEO Brad Jacobs has a proven blueprint, developed in industries including logistics and equipment rental, that he believes will serve as a template to achieve this goal. Founded by Jacobs in 2023, QXO currently has annual revenues of more than $10 billion and aims to reach $50 billion between 2030 and 2035.
The home depot And Lowe’swith total sales of approximately $159.5 billion and $83.6 billion respectively by 2024, are the only giants in the building materials industry. Webb Analytics’ 2025 Construction offer 150 reports that five other companies in the industry had more revenue than QXO in 2024:
- ABC offering ($20.7 billion)
- Builders FirstSource ($16.4 billion)
- Ferguson ($15.25 billion)
- Sherwin-Williams ($13.18 billion)
- Menards ($12.87 billion)
QXO’s vision is to surpass those competitors and become the third largest player in the industry, behind The Home Depot and Lowe’s. To achieve that goal, Jacobs plans to make a series of acquisitions and double the revenue of the acquired companies within five years of closing each deal.
Apollo’s investment in QXO
In an adrenaline rush toward that goal, QXO yesterday announced a $1.2 billion investment from an investor group led by affiliates of Apollo Global Management, Inc.
The financing will take the form of a series of convertible perpetual preference shares. These preferred shares can be converted into QXO common stock at an initial conversion price of $23.25 per share, according to a press release. At the time of writing this story, shares of QXO were up about 18% to over $23 per share.
A person familiar with the deal, who was granted anonymity to speak candidly, confirmed this The builder’s newspaper that QXO is nearing another takeover and is seriously considering at least one of seven potential targets. The potential acquisitions are a mix of companies with revenues between $1 billion and $5 billion and more transformative deals involving companies with revenues between $5 billion and $20 billion.
The investment agreement with Apollo states that QXO must finance at least one acquisition before July 15. However, the investment obligation would be extended for up to an additional twelve months if an acquisition is announced but not completed by the deadline.
QXO’s tech-savvy acquisition strategy
QXO’s technology-focused strategy, led by a Chief Artificial Intelligence Officer, focuses on acquiring traditional distributors and consolidating them into a single AI-driven digital platform to improve efficiencies and healthier margins.
Jacobs, with a net worth of over $16 billion, pursued this tech-savvy consolidation strategy successfully and lucratively in other industries such as oil, waste management and equipment rental.
However, Ken Pinto, founder of Kenzai VStells The builder’s newspaper that there is an inherent hurdle in applying this strategy to the construction industry, where demand data is fragmented and often non-existent. Subcontractors often place orders just days before they need materials; many still rely on manual processes such as fax, and there is limited predictive insight into future demand.
“I think [Jacobs] is going to do a great job aggregating, consolidating and applying technology to improve internal operations,” says Pinto. “I’m sure it will go great. He already knows how to do that. It goes plug and play. That will be easy.”
However, Pinto says, “Then he runs into the obstacle of needing demand signals to know how much inventory is the right inventory, and then he discovers, ‘oh, that data doesn’t exist in our industry.’”
Still, Jacobs is confident in his ability to optimize QXO’s acquisition objectives. QXO, a distributor of roofing, siding, waterproofing and other building products, acquired Beacon Roofing Supply for $11 billion in an all-cash deal in April 2025.
In one presentation Last year, Jacobs mentioned to investors 15 ways QXO has made Beacon Roofing Supply more efficient, including creating a national call center for dormant accounts, increasing cross-selling opportunities, choosing one ERP for the entire company and using digital tools to reduce price overruns.
The Beacon deal was QXO’s first and only acquisition and was a major milestone in Jacobs’ goal to consolidate the fragmented building products industry. Shortly after acquiring Beacon, Jacobs attempted to buy GMS for about $5 billion, but Home Depot bought the company last September for $5.5 billion.
Some industry stakeholders worry that Home Depot and Lowe’s could undermine QXO’s future acquisition opportunities. However, an analysis by Reuben Garner and John McGlade of The Benchmark Company says QXO is well positioned to make its next acquisition.
“With Home Depot and Lowe’s both integrating acquisitions from the past twelve months, we believe there is a window for QXO to find its next asset with less competition than some investors fear,” the analysts wrote.
Craig Webb, president of Webb Analytics, notes that there are acquisition opportunities in the building products sector at favorable prices. This is partly due to weak lumber prices, a glut of baby boomer owners looking to sell their businesses, and broader macroeconomic headwinds causing turbulence in the construction and renovation industries.
“Ultimately, construction companies depend on how many homes are built and how many people are making repairs and remodels,” Webb says.
While it is not yet known what QXO’s next acquisition will be, it is clear that Jacobs plans to play a major role in the company’s growth strategy as it aims to surpass the $50 billion annual revenue threshold. If Jacobs succeeds in his consolidation push, he could reshape the fragmented building materials industry and gain bargaining power.
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