France-based Rexel SA (FR:RXL) has rejected the $9.4 billion acquisition offer from the software company QXO, Inc. (QXO), founded by billionaire Brad Jacobs. Rexel believes that the offer significantly undervalues the company and fails to recognize its growth prospects under its PowerUP 2025 strategic plan. The PowerUP 2025, revealed by Rexel in 2022, outlines balanced and ambitious financial and environmental goals to be achieved by 2025.
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Rexel is a distribution company of electrical products and services. While QXO specializes in technology solutions and consulting for the manufacturing, distribution, and service industries.
Rexel Turns Down QXO’s Acquisition Proposal
Rexel stated that it received an unexpected, non-binding initial offer from QXO for a potential acquisition last week. The suggested price range was €28.00 to €28.40 per share.
Nonetheless, Rexel is optimistic about achieving its medium-term targets, which were stated in June. Its mid-term financial targets include projected sales growth between 5% and 8%, with targeted mergers and acquisitions contributing a 2% to 3% increase. The adjusted EBITA (earnings before interest, taxes, and amortization) margin is expected to exceed 7%. Rexel also aims for a dividend payout of at least 40%, along with annual share buybacks ranging from €50 million to €150 million.
Meanwhile, this move represents QXO’s first significant takeover attempt since Jacobs began using the company to acquire businesses in the sector. It also marks one of the largest foreign takeover bids in France in recent years. Additionally, in July, QXO announced that it was debt-free, which gives it more flexibility to look for expansion opportunities.
According to Reuters, QXO has no plans at the moment to submit a revised or higher offer.
What is the Target Price of Rexel Stock?
According to TipRanks, RXL stock has a Strong Buy rating, backed by three Buys and one Hold recommendation. The Rexel share price target is €28.25, which implies a change of 23.09% from the current trading level.
Year-to-date, RXL shares are down by 8.41%.
