What does a company do when its focus is building homes and it's in the midst of a housing market in shambles and a continually souring economy where practically no one can get credit? Acquire, of course ... Pulte Homes Inc. (NYSE:PHM) is
acquiring Centex Corp. (NYSE:CTX) in a stock-for-stock deal valued at $3.1 billion, including $1.8 billion of net debt.
"Combining these two industry leaders into one company puts us in an excellent position to navigate through the current housing downturn, poised to accelerate our return to profitability," said Pulte president and CEO Richard Dugas Jr. in a statement. Pulte says the deal will save it $350 million annually.
At closing, Pulte shareholders will own about 68% of the combined company, while Centex shareholders will hold the rest. Dugas will become chairman, president and CEO of Pulte, while Centex CEO Timothy Eller will join Pulte's board as vice chairman and serve as a consultant to the company for two years following the close of the transaction. The combined company currently would have an equity market capitalization of $4.1 billion, dethroning industry No. 1, D.R. Horton Inc. (NYSE:DHI).
In Pulte's press release, it said the combined company will have the strongest liquidity position among its peer group with more than $3.4 billion of cash as of March 31. The resulting company would use the Pulte1 name and would be headquartered in Bloomfield Hills, Mich., while maintaining a significant presence in Dallas, where Centex is based.
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Baz Hiralal
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Pulte Homes.
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