Pulte Homes Agrees to Buy Centex for $1.3 Billion (Update2)
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By Andrew Blackman
April 8 (Bloomberg) -- Pulte Homes Inc. agreed to buy Centex Corp. for $1.3 billion in stock to create the largest U.S. homebuilder by revenue.
Pulte agreed to pay 0.975 of a share for each Centex share, valuing Centex stock at $10.50 per share, 38 percent more than yesterday’s closing price of $7.62, the Bloomfield Hills, Michigan-based company said today in a statement. The transaction, approved unanimously by both companies’ boards, includes $1.8 billion in net debt, Pulte said.
The two companies are betting that by combining they will be better able to survive the worst housing decline since the 1930s, with new home sales down more than 75 percent since their July 2005 peak. The deal also will give Pulte access to states with stronger new home sales, including Texas and the Carolinas.
The acquisition “puts us in an excellent position to navigate through the current housing downturn, poised to accelerate our return to profitability,” Pulte Chief Executive Officer Richard Dugas said in the statement. “Together we will have considerable presence in more than 59 markets across America.”
The combined company currently would have a market value of $4.1 billion and an enterprise value of $7.2 billion, according to the statement. Pulte shareholders would own about 68 percent of the combined company and Centex shareholders would own 32 percent. Centex is based in Dallas, Texas.
Centex shares have fallen 28 percent this year while Pulte is down 1.5 percent and the benchmark Standard and Poor’s Supercomposite Homebuilding Index is down 3.8 percent.
Pulte has reported net losses for each of the last nine quarters, while Centex has posted losses for the last seven quarters. |
