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HERNDON, Va. - Beacon Roofing Supply, Inc. (NASDAQ:BECN), a leading distributor of roofing materials with a market capitalization of $7.1 billion, has advised its shareholders to reject the extended tender offer from QXO, Inc. (NYSE:QXO) to purchase all outstanding shares of Beacon at $124.25 per share in cash. The Board of Directors at Beacon has unanimously determined that the offer substantially undervalues the company and its growth prospects. According to InvestingPro data, the company’s current valuation metrics and strong financial health score support this position.
The Board’s decision is backed by Beacon’s performance record, which includes delivering shareholder returns of over 200% in the past five years, attributed to the successful execution of its Ambition 2025 strategy. Recent InvestingPro data shows impressive momentum with a 27.4% price return over the past six months and revenue growth of nearly 10% in the last twelve months. This strategy has been fundamental in achieving above-market growth and superior financial results, with analysts forecasting continued profitability this year.
Beacon’s confidence in its standalone plan is further reinforced by the fact that only approximately 17.27% of its shares have been tendered into QXO’s offer. This low percentage of tendered shares suggests that the majority of Beacon’s shareholders concur with the Board’s assessment of the offer’s inadequacy in reflecting the company’s full intrinsic value.
The company’s Board and management team are encouraging shareholders who have already tendered shares to withdraw them and for all shareholders to refrain from tendering any shares to QXO’s offer. J.P. Morgan and Lazard (NYSE:LAZ) are serving as financial advisors, while Sidley Austin LLP and Simpson Thacher & Bartlett LLP are providing legal counsel to Beacon in this matter.
Beacon, established in 1928 and listed on the Nasdaq Global Select Market, operates over 580 branches across the United States and Canada, serving nearly 110,000 customers. With annual revenue exceeding $9.6 billion and a healthy current ratio of 1.91, the company maintains strong operational efficiency while offering a range of building products, including its private label brand TRI-BUILT® and its proprietary digital account management suite, Beacon PRO+®. For detailed analysis and additional insights, investors can access the comprehensive Pro Research Report available on InvestingPro, which covers over 1,400 top US stocks.
The information presented in this article is based on a press release statement from Beacon Roofing Supply, Inc.
In other recent news, QXO, Inc. has received antitrust clearance from both U.S. and Canadian authorities for its planned acquisition of Beacon Roofing Supply, Inc. This regulatory approval marks a significant step forward in the acquisition process, which QXO is eager to finalize following the expiration of its all-cash tender offer. Meanwhile, Beacon Roofing Supply has formally rejected QXO’s $124.25 per share offer, with the Board of Directors stating the proposal undervalues the company. Financial advisors J.P. Morgan and Lazard have supported Beacon’s stance, deeming the offer financially inadequate.
Analyst firms have also weighed in on the developments. Stifel downgraded Beacon Roofing Supply from Buy to Hold, adjusting the target price to $122.55, citing the rejection of QXO’s offer and the reduced likelihood of alternative bids. Conversely, RBC Capital Markets maintained an Outperform rating with a $130 price target, suggesting Beacon might present a strategic plan justifying a higher valuation. Additionally, Beacon has adopted a Stockholder Rights Agreement to deter hostile takeovers, allowing non-acquiring shareholders to purchase additional shares at a reduced price.
Stifel maintains a Buy rating with a $131 target, acknowledging the potential for a proxy contest initiated by QXO. These recent developments indicate a complex landscape for Beacon Roofing Supply, as it navigates acquisition offers and strategic planning.
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