Investing.com -- Shares of Rexel (EPA:RXL) jumped on Monday after the company said that it had rejected an unsolicited preliminary bid from QXO (NASDAQ:QXO).

At 4:40 am (0840 GMT),Rexel was trading 9.9% higher at €25.25.

The bid, which was priced between €28.00 and €28.40 per share, was deemed by Rexel’s board as undervaluing the company. 

“Rexel’s Board of Directors has reviewed the proposal in detail and has unanimously decided not to pursue it,  considering that it significantly undervalues the company,” the company said in a statement. 

This initial offer represents a premium of over 23% compared to the closing price last Friday but falls short of Rexel’s peak share price for 2024 and the company’s estimated standalone fair value.

“We see significant runway for growth at Rexel, both organically and through M&A, especially in the US, and we think that Rexel is well positioned to capitalize on this growth,” said analysts at Citi Research in a note.

Analysts at Berenberg flag  that Rexel’s management team has a proven record of delivering shareholder value, with shares up 114% over the past five years. 

This is due to Rexel’s accelerated organic growth, strong margin expansion, well-executed M&A strategy, and improved ROCE and balance sheet position.

J.P. Morgan also emphasized that while Rexel’s rejection of the QXO bid was justified, the company’s positioning and strong balance sheet provide significant opportunities for future value creation. 

Despite potential risks, particularly related to macroeconomic factors and sector-specific challenges, Rexel’s stock is expected to perform well and remains a focal point for investors.

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