QXO Acquisition - Shares up 13%

QXO has announced its second major acquisition. The key points for investors are as follows:

• This follows the well trodden path of value-acretion by Brad Jacobs and his team.

• Management pretty well telegraphed an acquisition was close early in the month.

• The acquisition price was for less than the amount raised recently.

• In a LinkedIn post, Jacobs suggested that there was at least another acquisition ready to go linkedin.com/posts/brad…

Boom! More to come. - Brad Jacobs, Feb 11 2026

• The valuation looks good and disciplined, which is what we expect from this team especially having walked away from an acquisition last year after being outbid by Home Depot.

• The valuation will become even more attractive once embedded and it trends towards QXO’s stated margin targets.

• The shares are up 13%. There are plenty of Jacobs fans out there and they know that he is the master of creating value from acquisitions.

The following gives a little more detail for those wishing to understand the acquisition in more detail.

Following the $3 billion capital raise finalised in January (which you can read about here substack.com/@wonderstc…), QXO has started to deploy it with a $2.25 billion acquisition of Kodiak Building Partners.

Kodiak, operates across 26 states and is a distributor of lumber and components, trusses, windows and doors, construction supplies, waterproofing, roofing and complementary exterior materials.

Valuation and Earnings Accretion

The $2.25 billion purchase price, comprising $2.0 billion in cash and 13.2 million shares, implies a valuation of approximately 0.94x Kodiak’s 2025 revenue and 10.7x EBITDA.

Management has explicitly stated the acquisition is expected to be highly accretive to earnings in 2026. This accretion is projected to stem from the implementation of QXO's proprietary technology stack and procurement synergies, aiming to scale Kodiak’s existing margins toward the company’s long-term targets.

Funding Mechanism and Equity Terms

The funding structure leverages the Series C Preferred Stock arrangement to maintain a lean balance sheet that was announced in January.

A notable feature for shareholders is the repurchase option regarding the equity component. QXO has retained the right to buy back the 13.2 million shares issued to the sellers at a fixed price of $40 per share. This acts as a strategic hedge against dilution, allowing the company to cap the cost of the equity portion should the market price continue to trade at a premium. Essentially, QXO has a call option on the shares issued to Kodiak. This is a very clever feature as it simultaneously incentivises the sellers of Kodiak to help QXO extract value, whilst ensuring that existing shareholders don’t give up as much of the upside.

Strategic Implications

For more on the opportunity in QXO and why it is a Wonder Stock, click the linked below Deep Dive exclusively for premium subscribers of the Wonder Stocks substack.