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Beacon seeks to fend off QXO's hostile takeover with poison pill
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Beacon seeks to fend off QXO's hostile takeover with poison pill
Jan 28, 2025 4:53 PM

(Reuters) -Beacon Roofing Supply ( BECN ) on Tuesday adopted a poison pill defense to prevent a $11 billion hostile takeover by billionaire entrepreneur Brad Jacobs through his company QXO.

The defense strategy creates a roadblock for Jacobs' attempt to become a big player in building products distribution through QXO, which Jacobs created in 2023 by investing about $1 billion in a software company and renaming it.

The poison pill makes Beacon, North America's top publicly traded distributor of roofing materials, more expensive and less attractive to acquire by giving special privileges to current shareholders.

Beacon had repeatedly rebuffed Jacobs' offer of $124.25 per share, or $11 billion, presented privately on Nov. 11. Beacon's board argued that it "significantly undervalues the company," which sells annually about $10 billion in roofing materials in the U.S. and Canada.

Anticipating no competition from other potential buyers, Jacobs on Monday bypassed Beacon's board and management refusal by taking QXO's $11 billion takeover offer directly to Beacon shareholders.

Jacobs, who built his fortune by buying and selling companies in fragmented industries, said on Tuesday the poison pill was the "only thing stopping shareholders from acting to get cash expeditiously."

Beacon said the move was opportunistic and said it was looking for alternative buyers and an improved offer. But talks for now are informal, a person close to the discussions said. As of Tuesday, Beacon's board has not communicated to QXO the price per share for which it would consider a sale, the person said.

"I'm not going to speculate on what the board determines the value of the company is," Beacon's chief executive, Julian Francis, told CBNC on Monday. "What we're dealing with right now is an offer for $124.25 per share."

Beacon has until Feb. 14 to respond to the tender offer. Its board is expected again to recommend shareholders against it, a person close to the negotiations said. QXO may then extend the tender offer, which expires on Feb. 24, terminate it or improve it.

Analysts from RBC Capital Markets and Jefferies have gathered preliminary indications that shareholders would support a sale of the company. Raymond James found that a takeover offer of $134 per share could potentially secure a majority vote.

Data from Beacon's annual earnings to be released next month and its investor day on March 13 should help shareholders make a more informed decision about a fair value for a potential sale.

Under the limited duration stockholder rights agreement, or poison pill, adopted on Tuesday, Beacon will issue, by means of a dividend, one preferred share purchase right for each outstanding share of Beacon common stock to stockholders of record as of the close of business on Feb. 7.

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