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Homebuilders Lennar, CalAtlantic to Merge

Thursday, November 9, 2017

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Two homebuilding companies recently reached a merger agreement that will result in the largest homebuilder in the United States.

Lennar Corporation (Miami) and CalAtlantic Group Inc. (Arlington, Virginia) announced the merger late last month, with companies praising the agreement.

The Deal

Each share of CalAtlantic stock will be exchanged for .885 shares of Lennar Class A common stock—a transaction valued at $9.3 billion, with $3.6 in assumed debt.

CalAtlantic

Lennar Corporation (Miami) and CalAtlantic Group Inc. (Arlington, Virginia) announced the merger late last month, with companies praising the agreement.

According to reports, the companies combined over the last 12 months saw revenues of more than $17 billion, and it’s estimated that the deal with generate an annual cost savings of about $250 million a year.

In the announcement, company leaders focused on how the deal with impact consumers.

"Accordingly, our overall company size and local critical mass will yield significant benefits through efficiencies in purchasing, access to land, labor and overhead allocation to a greater number of deliveries,” said Stuart Miller, Chief Executive Officer of Lennar.

“The combined land portfolio will position the company for strong profitability for years to come, as we continue to benefit from a solid homebuilding market, supported by job and wage growth, consumer confidence, low levels of inventory and a production deficit."

The combined company will control approximately 240,000 home sites with 1,300 communities in 49 markets across 21 states, which, translated, means they will access where 50 percent of the U.S. population resides.

"Our combination with Lennar underscores the quality and attractiveness of the CalAtlantic brand and people, and the business our talented team has worked hard to build,” said Larry Nicholson, President and Chief Executive Officer of CalAtlantic.

“Lennar is a well-respected name in the homebuilding industry and their team shares a deep commitment to innovation, quality, integrity and a focus on a superior customer experience."

   

Tagged categories: Acquisitions; Finance; Good Technical Practice; Home builders; Mergers; North America

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