Bloomfield Hills, Michigan-based home builder, Pulte Homes (NYSE: PHM), and Dallas, Texas-based Centex Corp. (NYSE: CTX) will merge when Pulte acquires Centex in a stock swap valued at $1.3 billion. The acquisition includes net debt of $1.8 billion, making the total value of the merger at $3.1 billion.
According to a recent article published by the South Florida Business Journal, the terms of the agreement state that Centex shareholders will receive 0.975 of a share of Pulte common stock for each share of Centex that they own. When the transaction officially goes through sometime in the third quarter of the year, Pulte will be the nation’s largest home builder.
The deal should allow for $350 million in annual cost savings and $1 billion of debt will be retired by the end of 2009, stated Pulte and Centex on Wednesday. The board of directors of both home builders unanimously approved the merger.
“The transaction will combine Pulte’s strength in active-adult and retirement housing with Centex’s hefty market share of first-time homebuyers. The acquisition also will give Pulte large tracts of land in Texas and the Carolinas, two of the most resilient real estate markets, and a presence in 29 states and Washington, D.C.,” said J.W. Elphinstone, Associated Press Real Estate Writer.
Job cuts are anticipated; however, the amount of jobs lost in unspecified. The new company includes Del Webb, DiVosta, and Fox & Jacobs brand homes.
“It allows us to not only survive but thrive in any economic climate,” said Richard Dugas Jr., Pulte’s president and chief executive.
Stockholders of Pulte will own close to 68 percent of the merged company, while Centex shareholders will own the remaining 32 percent.
124.4 million – the number of outstanding shares of Centex for the quarter ended December 31, 2008.
Shares of Centex climbed $1.81 (24 percent) to $9.44. Shares of Pulte dropped $0.82 (7 percent) to $9.95.
See more:
http://www.bizjournals.com/southflorida/stories/2009/04/06/daily29.html
http://www.forbes.com/feeds/afx/2009/04/08/afx6268885.html
http://www.forbes.com/feeds/options/2009/04/08/options21110.html
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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..
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The only part of this deal that really adds up is Pulte acquiring land in somewhat stable areas.
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Mack – That seems like the best part of the deal for Pulte. The $350 million in savings and Texas sweeten the deal a bit too.
this does seems like it will be a big plus for both companies. I hope it works out, centex actually has a new community they just opened in my area
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A brilliant example what to do when the market is going down. Booth companies can survive, even if there been some job cuts, offices closed, ect. But maybe they go stronger out of this cries.
I think this will be a good thing for the industry as a whole. IMHO, a little less competition in the new home industry is a good thing right now.
Not surprising really. There is as much money to be made for the destruction or decline of a civilization as there is in the uprising. Centex made a similar product to Pulte as far as quality. They can eliminate some overages, gain marketshare in areas and save money. Pulte is my favorite home builder. They have great floor plans and build beautiful homes.
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This looks like the most suitable and a typical consolidation move within the home buildres sector. I suspect there will be more similar moves to come as the recession continues to bite.
Seems like Pulte gets a great deal in the end! 350 million savings is a big chunk of money! Saving money is definitely the key to succeeding in this rough economy.
Smooth move on Pulte’s part. Good economic sense, foresight and timing. Sometimes you have to take risks and make bold moves to get and stay ahead.
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“It allows us to not only survive but thrive in any economic climate,” said Richard Dugas Jr., Pulte’s president and chief executive. Thats the name of the game in any business.
Adaptability is the key to succeeding in any business these days. Technology changes so fast one has to be adaptive and able to think outside the box to keep up with the advancements being made these days.
It was bound to happen. In this market we will probably see quite a bit of consolidation. Good move though as they are both good companies.
good move for both the companies.keep it up.
The economy is certainly tough and those that cannot adapt will die. The merging of two companies isn’t really avoidable.
I agree with a lot what it being said there. Sometimes companies have to merge to remain successful, espescially with these tough economic times our country is facing.