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On Thursday, Raymond (NSE:RYMD) James analyst Samuel Darkatsh downgraded Beacon Roofing Supply stock from Outperform to Market Perform, following the company’s recent acquisition announcement. Beacon Roofing Supply (NASDAQ:BECN), currently trading at $123.81 and near its 52-week high of $123.90, entered into a definitive agreement to be acquired by QXO for $124.35 per share in cash. The company has demonstrated strong momentum, with a remarkable 44% gain over the past six months.
The transaction, which is expected to close in late April, offers Beacon shareholders a roughly 50 basis point spread, implying an annualized internal rate of return (IRR) of approximately 5%. Darkatsh noted that the acquisition is seen as a positive development for Beacon’s shareholders, particularly in light of the soft demand affecting Beacon’s end-markets, as evidenced by their fourth-quarter 2024 results. According to InvestingPro data, Beacon maintains a healthy financial position with a current ratio of 1.97 and generates annual revenue of $9.76 billion.
The favorable view of the acquisition is also supported by a poll conducted by Raymond James with investors prior to the release of the fourth-quarter results and first-quarter outlook. The feedback from the poll reinforced the analyst’s perspective on the deal’s benefits for shareholders.
Both Beacon Roofing Supply and QXO’s boards have unanimously approved the transaction. It was also disclosed that the tender was exempted from the previous shareholder rights plan, commonly known as a "poison pill." Furthermore, the acquisition has already received antitrust clearance in both the United States and Canada. QXO has secured the necessary financing to complete the purchase.
This strategic move by Beacon Roofing Supply represents a significant step in the company’s trajectory, as it joins forces with QXO. Shareholders of Beacon Roofing Supply can now look forward to the completion of the acquisition by the end of April, marking a new chapter for the company. For deeper insights into merger implications and comprehensive analysis, InvestingPro subscribers can access detailed financial health metrics and expert research reports covering this $7.62 billion market cap company.
In other recent news, QXO, Inc. has announced an extension of its tender offer for the acquisition of Beacon Roofing Supply, Inc. The offer, initially set to expire on March 19, 2025, will now remain open until March 31, 2025, with an amended price of $124.35 per share. As of the original expiration date, approximately 12.2 million shares, representing about 19.71% of Beacon’s outstanding shares, have been tendered. This extension is part of a definitive merger agreement between the two companies, as detailed in the offering documents filed with the Securities and Exchange Commission. QXO’s strategic move aims to position the company as a leading force in the building products distribution industry, with ambitions for substantial revenue growth through acquisitions and organic expansion. In light of ongoing negotiations for a prospective $11 billion acquisition, Beacon has delayed its investor day, which was originally scheduled for March 13. The companies are working towards finalizing a definitive agreement, although the current status of negotiations has not been disclosed. Investors are encouraged to review the SEC filings for more detailed information regarding the tender offer.
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