This article is proudly sponsored by Sew Torn, a film by Diamantis Zavitsanos.
QXO’s $5 Billion All-Cash Offer for GMS: Will the Acquisition Actually Close?
Shares of GMS Inc. (NYSE: GMS) surged over 17% in after-hours trading following an unsolicited $5 billion all-cash acquisition proposal from QXO, Inc. (NYSE: QXO), led by serial dealmaker Brad Jacobs.
This proposed takeover has ignited investor interest — but the critical question remains:
Is this deal likely to go through?
Let’s objectively break it down.
The Offer: $95.20/Share in Cash
QXO’s proposal values GMS at $95.20 per share, a:
- 27% premium to GMS’s 60-day volume-weighted average price (VWAP) of $74.82.
- All-cash structure — providing certainty and immediate value to shareholders.
In a market that continues to reward liquidity and premium takeouts, this deal checks key boxes.
Why the Deal Makes Strategic Sense
This would mark QXO’s second multibillion-dollar deal since its inception — following its recent $11 billion acquisition of Beacon Roofing Supply in April.
Jacobs has made it clear:
“We aim to lead the $800 billion building products distribution industry.”
GMS, a leading distributor of wallboard, ceilings, steel framing, and insulation, is a perfect bolt-on acquisition to support QXO’s ambitious path to $50 billion in annual revenues.
Is the GMS Board Likely to Accept?
Likely Yes — Based on the Following:
- Strong Premium: 27% above VWAP is a historically compelling figure for boards.
- Shareholder Pressure: With GMS shares jumping +17% instantly, investors are signaling clear support.
- No Strategic Poison Pill or Staggered Board: GMS has no apparent defense mechanisms in place, making a deal feasible if shareholders back it.
- GMS Has No Clear Alternative Path to Create This Much Near-Term Value — Jacobs’ “underwhelming performance” comment may sting, but it’s not inaccurate based on relative valuation vs. peers.
Verdict:
The GMS board is more than likely to approve the deal — possibly after pressing QXO for a modest bump in price or terms, but unlikely to walk away altogether.
Regulatory Approval Risk: Low to Moderate
There are no obvious antitrust red flags:
- While QXO also owns Beacon Roofing, the overlap with GMS is complementary, not redundant (more vertical than horizontal).
- GMS’s product mix is distinct (interior building systems vs. roofing materials), and regional market concentration is not extreme.
Based on historical Hart-Scott-Rodino outcomes in similar mid-market building supply roll-ups, this deal is very likely to be approved — especially if QXO offers modest divestitures if necessary.
Verdict:
Regulators are more than likely to approve this transaction — especially given the market’s fragmented structure and minimal vertical/control concerns.
Risks That Could Still Derail It
While this deal has a high probability of success, these remain key risks:
- Still Unsolicited: The offer is non-binding. No definitive agreement exists yet.
- GMS May Try to Shop Itself: The board might run a short process to see if other bidders emerge — especially private equity.
- QXO Going Hostile: Jacobs has signaled he’s willing to go directly to shareholders if GMS refuses to engage — this could lead to a prolonged process, though likely still ends in a deal.
Final Verdict: 80-85% Probability of Deal Closing
Taking into account:
- The strong offer premium
- QXO’s credibility and M&A track record
- Minimal regulatory hurdles
- GMS’s limited near-term alternatives for value creation
This deal is more likely than not to close successfully, possibly as early as August 2025, assuming cooperation from the GMS board and no competing bids.
Investor Takeaway: Merger Arbitrage Opportunity?
If GMS trades (well) below $95.20, this could present a compelling merger arbitrage setup with a hint of leverage (but not levered at this stage given the unsolicited nature of the bid):
- Strong buyer with financing and track record
- Low regulatory risk
- High likelihood of eventual board approval
DISCLAIMER: This analysis of the aforementioned stock security is in no way to be construed, understood, or seen as formal, professional, or any other form of investment advice. We are simply expressing our opinions regarding a publicly traded entity.
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