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.