Rexel Rebuffs Acquisition Bid, But QXO Still Plans to be a Major Force in Distribution

While Rexel’s corporate board of directors rejected QXO’s acquisition proposal earlier this month, from a variety of published business reports EM learned that Brad Jacobs, the CEO and chairman of QXO, plans to build a huge building products distributor. 
Jacobs, who made a name for himself as the founder of United Rentals and United Waste Systems and in the M&A arena through several hundred acquisitions, plans to build QXO into a multi-billion distributor with interests in a variety of construction distribution verticals, including the electrical market. A report in Hardware Building Supply Dealer said Jacobs envisions QXO eventually growing to $50 billion in sales, and achieving that scale with M&As as a primary driver. 
In his Linkedin profile, Jacobs says, “I’m a career CEO with a unique track record as a Wall Street moneymaker. I’ve founded eight billion-dollar or multibillion-dollar companies, creating tens of billions of dollars of value for shareholders across multiple industries. This includes six publicly traded corporations: United Waste Systems, Inc.; United Rentals Inc.; XPO Inc.; GXO Logistics Inc.; RXO Inc.; and my new company, QXO Inc. 
“QXO will consolidate the building products distribution industry, which is large, growing and rich with acquisition opportunities. Building products distribution has approximately $800 billion in annual revenue between North American and Europe. Our strategy is to create a tech-forward industry leader through accretive M&A and organic growth.
“My goal with QXO, as with all my ventures, is to generate outsized value for shareholders. My edge is that I hire exceptionally talented people who think big and are committed to achieving remarkable results. My teams and I have completed about 500 M&A transactions across multiple industries, and we’ve raised approximately $40 billion of debt and equity capital, including three IPOs.”
On QXO’s website (www.qxo.com), the company says it provides technology solutions to clients in the manufacturing, distribution and service sectors. QXO’s strategy, it says on the website, is to provide consulting and professional services, specialized programming, training and technical support.
“As a value-added reseller of business application software, QXO offers solutions for accounting, financial reporting, enterprise resource planning, warehouse management systems, customer relationship management, business intelligence and other applications,” QXO stated on its website. “Additionally, QXO develops and publishes its own proprietary software.”
 QXO also said on its website that because the $800-billion building products distribution industry is just beginning to harness the power of AI and B2B e-commerce and other technologies, it  represents “a compelling opportunity for QXO as a tech-focused entrant.”
“QXO’s combination of scale and innovation should elevate the customer experience, increase sales force effectiveness and enable margin expansion,” the company said on its website. “According to industry data, e-commerce represents only a single- to mid-single-digit percentage of total revenue in the building products industry. This share is expected to triple by 2030.
“Technology can further transform distributors’ businesses via price optimization, demand forecasting, warehouse automation and robotics, automated inventory management, route optimization for delivery fleets, supply chain visibility and end-to-end digital customer connectivity. QXO’s strategy anticipates that these drivers, among others, will be central to the company’s goal of outsized shareholder value creation.”
Earlier this month, Rexel, Paris, France, received an unsolicited, non-binding preliminary proposal from QXO regarding a potential acquisition at an indicative price of €28.00 to €28.40 per share.
According to a post on www.rexel.com, “Rexel’s board of directors has reviewed the proposal in detail and has unanimously decided not to pursue it, considering that it significantly undervalues the company and does not reflect its value creation potential through its Power Up 25 strategic plan. The board of directors remains highly confident in Rexel’s management to deliver the mid-term objectives presented in during the June 2024 Capital Markets Day. 
“Indeed, Rexel’s management team has successfully demonstrated over the last few years its ability to increase the company’s underlying profitability and enhance its growth profile in an accelerating electrification world. Rexel does not intend to make any additional comments on this proposal.”