(Christopher Goodney/Bloomberg News)
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Brad Jacobs, the billionaire founder of XPO Inc., plans to build his next company by acquiring businesses that distribute building materials in North America and Europe, a market with combined revenue of about $800 billion.
His new company, called QXO, will target a wide range of products to distribute, including construction materials, plumbing supplies, fencing and decking, finished products such as doors and windows, and even heating and cooling equipment. Jacobs expects to capture $1 billion of annual revenue in the first year of his buying spree and $5 billion within three years, he said.
“This is an industry that’s right up my alley,” Jacobs said in a telephone interview. “I’m a jack of one trade. And that trade – the playbook of consolidation, improving the business, getting synergies – I can do that here.”
The building supply industry is behind on the adoption of technology, such as online ordering and factory robotics for making prebuilt structures with trusses and wall panels, he said. It’s also highly fragmented, with about 7,000 distributors in North America and 13,000 in Europe, according to Jacobs, who said he researched more than 500 companies in his search for a new industry to enter.
He said QXO’s customers will be commercial builders of homes, apartments, industrial buildings and infrastructure, as well as companies that repair and remodel.
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In the U.S, Jacobs will bump up against Ferguson Plc, which distributes heating and cooling equipment, plumbing supplies and other products; and Builders FirstSource, which has grown rapidly through acquisitions, including a $2.5 billion all-stock merger with BMC Stock Holdings completed in 2021.
Jacobs, who has built five companies, not including two spinoffs from XPO, said last week that he’s contributing $900 million of his own money along with $100 million from other investors to fund acquisitions at QXO, which will be publicly listed.
Jacobs will be both chairman and chief executive officer of QXO while remaining chairman of XPO and spinoffs RXO Inc. and GXO Logistics. XPO ranks No. 5 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and GXO and RXO rank Nos. 6 and 18 respectively on the TT list of the top 100 logistics companies in North America.
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