Shares of QXO, Inc. (NYSE: QXO) experienced a significant after-hours rally, climbing approximately 16.6% to $27.06 following the announcement of a major acquisition. The company has entered into a definitive agreement to purchase Kodiak Building Partners for a total consideration of $2.25 billion, structured as a combination of cash and stock. The deal, which was signed on February 10, 2026, marks a strategic expansion for QXO beyond its core roofing and waterproofing business into the lumber and structural products sector.
Strategic Expansion and Financial Details
The transaction involves a payment of $2 billion in cash to Kodiak's owners, along with the issuance of 13,157,895 shares of QXO common stock. A notable provision within the agreement grants QXO the option to repurchase these shares at a price of $40 per share. The merger is contingent upon customary closing conditions, including regulatory approval under the Hart-Scott-Rodino Act and the satisfactory completion of Kodiak's audited financial results for the 2025 fiscal year. The parties are bound to the agreement until May 1, 2026, unless the transaction concludes earlier.
Market Context and Competitive Landscape
This acquisition is a calculated move by QXO Chairman Brad Jacobs to build a wholesale building materials powerhouse capable of competing with major retailers like Home Depot (HD) and Lowe's (LOW). Following its acquisition of Beacon Roofing Supply last year, QXO has been actively seeking "bolt-on" acquisitions to scale its operations. The company recently secured approximately $3 billion in convertible preferred financing, led by Apollo Global Management (APO) and Temasek, specifically to fund such strategic deals. The Kodiak purchase is positioned to be highly accretive to earnings per share in 2026 and is projected to expand QXO's total addressable market to over $200 billion.
Kodiak Building Partners operates 110 locations across 26 states, distributing a wide range of products including lumber, trusses, windows, and doors. The company reported estimated revenues of $2.4 billion for 2025. QXO's leadership, including CEO Brad Jacobs, highlighted the complementary nature of the businesses, expecting margin improvements through enhanced procurement scale, network optimization, and AI-driven inventory management. Kodiak CEO Steve Swinney endorsed the move, calling QXO "the most exciting company in the industry." Financial advisors on the deal include Morgan Stanley (MS) and Wells Fargo (WFC) for QXO, with RBC (RY) and KeyBanc (KEY) advising Kodiak.
Investor Considerations and Execution Risk
While the market reaction has been positive, analysts and investors are closely monitoring several key factors. The deal introduces execution risk, particularly regarding the integration of the two companies and the deployment of a substantial amount of cash. There is also ongoing debate concerning the potential dilution from the stock component of the deal and the implications of the share repurchase clause on QXO's balance sheet and capacity for future acquisitions. These concerns are amplified by a challenging macroeconomic environment for residential construction, where high mortgage rates continue to pressure new build and major renovation markets.
Principia analyst Lilli Tillman Smith suggested the combination "could meaningfully shake up the roofing market." However, the ultimate success of the deal hinges on QXO's ability to navigate these headwinds and realize the projected synergies. All eyes are now on the company's upcoming annual report for 2025, scheduled for release on February 26, 2026. This filing is anticipated to provide critical details on QXO's post-acquisition financial health, cash flow, and balance sheet, offering investors greater clarity on the path forward for the integrated entity.
During the regular trading session prior to the announcement, QXO stock traded between $23.02 and $27.14, with volume reaching about 17.2 million shares. The after-hours surge reflects investor optimism about the strategic merits of the acquisition, but the path to closing remains subject to regulatory review and final financial audits.