Why Brad Jacobs Is Spending $11 Billion on a Roofing Supply Business

SPEAKER_2 (0:02)

Bloomberg Audio Studios, Podcasts, Radio, News.

Tracy Alloway (0:18)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:23)

And I'm Joe Weisenthal.

Tracy Alloway (0:24)

Joe, do you think it's fair to say it's been kind of, kind of a quiet year for big deals? I think that's fair.

Joe Weisenthal (0:31)

Oh, I think you're like, kind of a quiet year.

Tracy Alloway (0:33)

Oh, no.

Joe Weisenthal (0:34)

Dot, dot, no. For big deals, yes. Actually, this has been kind of, you know, one of the big thematic surprises of 2025, obviously, when the new administration came in, they were like, deals. And at least for now, I would say largely, you know, macro stuff. We actually have not gotten a big deals with so far.

Tracy Alloway (0:52)

Right. The reason we haven't had that many deals is because there's been so much news, arguably, right? There's all this uncertainty in the broader market. So people aren't really sure what they want to do, if they want to risk it all. But that said, there is some stuff getting done. And in particular, there was recently a very, very big deal, a blockbuster all cash deal, some have been saying, and it involves someone who's been on the show before.

Joe Weisenthal (1:17)

A friend of the podcast.

Tracy Alloway (1:18)

That's right. So Brad Jacobs, his new company, QXO, bought Beacon Roofing for, I think it was 11 billion, is that right? So again, an all cash deal for $11 billion in this market, kind of notable. We should talk about it.

Joe Weisenthal (1:35)

I love talking to Brad. We've talked to him a handful of times on the show. Often we've talked about his philosophy of buying companies, turning them around, turning them into billion dollar juggernauts. We talked to him about logistics and supply chains, but now we can talk about something specific and how he's going to turn one specific company around. So I'm excited.

Tracy Alloway (1:54)

Exactly. Okay. So let's get into the specifics. We have Brad Jacobs, billionaire founder of XPO, GXO, QXO, as I mentioned, basically all the XO companies, plus United Waste, lots and lots, a serial entrepreneur. Let's just put it that way. Brad, thank you so much for coming back on Odd Lots.

Brad Jacobs (2:12)

Tracy, it's great to be here.

Tracy Alloway (2:13)

All right. So congrats on the deal.

Brad Jacobs (2:15)

Thank you.

Tracy Alloway (2:16)

From what I understand, this has been in the works for quite a while and there was a lot of back and forth. Yeah.

Brad Jacobs (2:21)

So before we even did Beacon, we were looking at 55, as you know, cause I was on the podcast, looking at 55 different industries and trying to pick the one that matches our skillset, that matches our playbook the best, the things that worked for us at all the companies that you mentioned before. And then we settled on building products distribution cause we liked it a lot, the size, the growth, the fragmentation, the opportunity to apply technology. And then we zeroed in on Beacon and we said, Beacon is the one, that's the girl I want to marry, Beacon. And we said, this is like a perfect match for what we do. And unfortunately they didn't want to sell. So we had to do a little hostile there, but we're past that and now we have a friendly deal and we're looking forward to closing it.

Joe Weisenthal (3:02)

Tell us about Beacon. What is the actual assets that they have that you're acquiring?

Brad Jacobs (3:06)

So Beacon is a distributor. It's a distributor of mostly roofing, but they also do waterproofing and other ancillary products, but it's mostly roofing. And what I like about that is everyone has a roof. The roof's not going anywhere. They're not going into the metaverse. They're not going to way to AI. I mean, all structures are going to need a roof and there's going to be more roofs needed next year and the following year and the following year and 10 years from now there's more. So there's underlying growth.

Joe Weisenthal (3:31)

I love the simplicity. Everyone needs a roof. I was like, yeah, I actually can't argue with that. All right, keep going.

Brad Jacobs (3:35)

Not only does everyone need a roof, but everyone has to fix their roof every once in a while. So roofs break, 15, 20 years, you need a new roof and you have hurricanes and storms and if your roof is leaking, it's not a discretionary choice. You have to fix the roof. So 80% of beacon sales is non-discretionary. Someone needs to fix their roof. That's what I like about the business. It's a largely non-discretionary business.