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There is an apparent bidding war to buy GMS Inc. (GMS), a leading supplier of building materials. Earlier this past week, the company reported that it got an unsolicited proposal from QXO, Inc. (QXO) – a rival building products distributor that just went public in January.

QXO made an offer to acquire all outstanding shares of GMS for $95.20 per share in cash. The deal is valued at about $5 billion, and at the time of the offer, the $95.20 per share price was a 27% increase over GMS' 60-day average price of $74.82 per share.

GMS said in a statement that it will “carefully review and evaluate the unsolicited proposal to determine the course of action that it believes is in the best interests of the company and all GMS shareholders.”

GMS officials said there would be no further comment on the proposal until the board has completed its review. GMS is the bigger company at present, with $1.3 billion in net sales in its most recent quarter and $5.5 billion in sales last fiscal year. QXO had just $13.5 million in revenue in the last quarter.

QXO has an aggressive plan to grow via acquisitions, and the bid for GMS is part of it. In April, it acquired Beacon Roofing Supply for $11 billion. Beacon Roofing generated about $9.8 billion in revenue in the last fiscal year.

QXO has an ambitious goal of generating $50 billion in annual revenues over the next 10 years via a combination of acquisitions and organic growth. On Friday, QXO stock rose about 9%.

But also on Friday, news broke that GMS had another offer – and the stock price skyrocketed 25% to around $100 per share.

Home Depot is Reportedly Interested, Too

The Wall Street Journal reported on Friday that building supply retailer Home Depot (HD) made a bid to buy GMS, citing people familiar with the matter. Home Depot officials did not comment on the report, according to the Journal.

Last year around this time, Home Depot acquired SRS Distribution, a roofing supply company, for about $18.25 billion.

On the first quarter earnings call, Home Depot CEO Ted Decker said the SRS acquisition has exceeded their expectations. “We believe they’re taking share in each of those three verticals,” Decker said. “So, couldn’t be happier with SRS.”

Home Depot stock ticked up about 1% on Friday. Analysts at RBC Capital said the reported Home Depot offer may be viewed “slightly negatively” as it could dilute gross margins and delay the share buyback pause, reported Investors Business Daily.

What Happens Next?

As for GMS, it received several price target upgrades on the bidding war, including RBC, which bumped it up to $95.20, from $65 per share, and Truist, which raised it to $105 per share, from $80. Overall, GMS had a median price target of $95 per share on Friday.

GMS reported fiscal fourth quarter earnings on Wednesday that topped revenue and earnings estimates. That strong report, driven by a reduction in selling, general, and administrative expenses, boosted the stock some 16%, at its peak, before finishing trading up 11%.

Since the beginning of the week, GMS stock has climbed 30% to about $100 per share. With the price higher than its proposed sale price, it will be interesting to where it settles from here after the week's surge. Investors might want to sit tight until this plays out a bit.

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