GMS, a major distributor of building materials, has become the center of a competitive acquisition battle as billionaire Brad Jacobs’s QXO and home improvement retailer Home Depot both vie for control of the company, CNBC reports.
The developments come amid ongoing consolidation in the US building products industry.
QXO, led by Brad Jacobs, has offered to acquire GMS for about $5 billion in cash—roughly $95.20 per share, a 17% premium over GMS’s latest closing price and a 29% premium compared to its share value in late May. Jacobs has signaled that if the GMS board does not engage in negotiations by June 24, QXO is prepared to take the proposal directly to shareholders in what could become a hostile takeover.
The potential acquisition marks Jacobs’s second hostile approach in the sector this year and aligns with his broader strategy to expand QXO into a $50 billion revenue distributor within the next decade. The company recently completed an $11 billion purchase of Beacon Roofing Supply, which significantly increased its market footprint in the US and Canada. An acquisition of GMS would further diversify QXO’s offerings, extending its reach from roofing into interior materials such as drywall and ceilings.
At the same time, The Wall Street Journal has reported that Home Depot has also made an offer for GMS, though neither Home Depot nor GMS has commented publicly on the matter. GMS said in a statement Thursday that its board will review the unsolicited proposal from QXO.
Founded in Georgia, GMS operates over 300 distribution centers and supplies a wide range of construction products, including wallboard, steel framing, and gypsum. The company’s shares rose to a five-month high after reporting strong quarterly earnings and cost-cutting measures earlier in the week.
Jacobs’s letter to GMS CEO John Turner revealed that discussions between the two companies began in June of last year and continued as recently as May. Jacobs also claimed that GMS’s management had solicited interest from other potential buyers via its bankers at J.P. Morgan and Jefferies.
QXO is being advised by Goldman Sachs and Morgan Stanley, with legal counsel from Paul, Weiss, Rifkind, Wharton & Garrison LLP.
Jacobs has a long track record of acquiring companies in fragmented industries, building scale, and unlocking value for shareholders. QXO itself was a relatively small software company before Jacobs invested $1 billion, rebranding and refocusing the firm as a major player in building products distribution.
