Pulte Homes and Centex To Merge in Billion Dollar Deal
Centex and Pulte Homes are the first home builder mega merger to come through, but odds are it will not be the last.
The 1.3 billion dollar stock swap is being done while both companies are hemorrhaging money in the housing downturn. The merging of assets, valued at a combined 7.2 billion dollar enterprise value should provide enough protection to make it through till the markets turn around.
The Pulte Homes name will be the new name of the company and the headquarters will remain in Bloomington Hills, Michigan. So, it looks like Pulte management will be the dominant force in the merger.
Directors of both companies have unanimously approved the deal. The combined company will use the Pulte name and will be based in Bloomfield Hills, Mich., where Pulte is based. The company plans to maintain a significant presence in Dallas, where Centex has its headquarters.
Under the agreement, Centex shareholders will receive 0.975 shares of Pulte stock for each share of Centex they own. Based on the $10.77 closing price of Pulte stock on Tuesday, the transaction has a value of $10.50 a Centex share, a 37 percent premium over Centex closing price of $7.62 on Tuesday.
Upon closing, Pulte shareholders will own about 68 percent of the combined company, and Centex shareholders will own about 32 percent. NYTimes.com.
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Comment by Portland Real Estate on 8 April 2009:
This should be an interesting merger. Although some companies should realize that growing larger in a bad economy just gums up the works more. Sometimes you have to slim down to keep your place in the world
Comment by News Review on 8 April 2009:
Good move for both the corporations to answer to the economic crisis.. However, its a bad news for those who will be removed because of the transaction.. Hope the companies can do away with the job cutting.. Hopefully..
Pingback by Real Estate Roundup - Week 15 on 10 April 2009:
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Comment by Big Sur Real Estate on 11 April 2009:
Impressive deal, I hope they can survive.
Comment by Vikas on 13 May 2009:
According to the CEO of Pulte, Richard Dugas, the deal will help the firm to navigate through the present housing downturn and will also accelerate the profit.
After the acquisition, the two firms together will have a presence in more than 59 regions in America.