Building materials distributor QXO announced Jan. 5 that it has secured $1.2 billion in new investments that the company said will fund future acquisitions.

The funds — in the form of a new series of convertible perpetual preferred stock — are managed by affiliates of Apollo Global Management and certain other investors.

Under the funding agreement, the investors committed to purchase the new stock to fund one or more qualifying acquisitions through July 15 of this year. That commitment will extend up to another 12 months if a definitive acquisition agreement is executed before July 15.

Brad Jacobs Stepping Down from XPO & GXO to Focus More on QXO (Dec. 15).

A person familiar with the investment told MDM that QXO is in “advanced stages” of completing another significant acquisition, following the company’s $11 billion purchase of Beacon in mid-2024. They added that the company is in “serious” discussions with seven companies at “attractive valuations” and that the targets represent a mix of “mid-sized” deals for companies with between $1 billion and $5 billion in annual revenue and “transformational” deals with companies with revenue between $5 billion and $20 billion.

The person further said a weaker macroeconomic environment is increasing the number of attractive M&A opportunities at attractive valuations.

“Our target outcome for any acquisition is to approximately double EBITDA within three to five years through integration, technology upgrades and disciplined cost management,” a QXO spokesperson told MDM about the matter.

QXO’s stock surged more than 14% the morning of Jan. 5 on the news.

The new stock will pay a preferred dividend rate of 4.75% per annum and can be converted into shares of QXO’s common stock at an initial price of $23.25 per share.

MDM’s Take

QXO has consistently stated its ambitious goal of achieving $50 billion in annual revenue over the next decade through a combination of acquisitions and organic growth. Its $11 billion purchase of Beacon (~$10B in 2024 revenue) in mid-2025 put it at about 20% toward that quest. It will likely take another three to five major acquisitions for QXO to complete that goal, which will require significant capital. 

We know QXO already has the funds to facilitate at least one major deal at the moment, given that it made a $5 billion offer to purchase GMS in June of last year right after it closed the Beacon deal, with GMS ultimately taking a $5.5 billion offer to be acquired by The Home Depot.

As of July of 2024, QXO’s funding war chest was up to $5 billion, which included a $3.5 billion round in June 2024 followed by a $620 mimllion placement a month later. To help facilitate the Beacon deal, raised another $830 million in private placement in March 2025 before selling $500 million of shares in common stock a month later. 

The timing requirements of the latest $1.2 billion funding tells us two key things: 1) QXO’s funding pipeline remains strong, and 2) we can expect QXO to execute its second acquisition by mid-July.

Given that Jacobs has stepped down from his roles at XPO and GXO to focus more on QXO as of Jan. 1, there’s no reason to doubt him on that endeavor.