Pulte Homes (PHM) agrees to buy Centex Homes (CTX) in a $1.3B survival deal, thus becoming the largest U.S. home builder and making big waves in the U.S. housing and real estate markets.
Pulte Homes, Inc. (NYSE:PHM) and Centex Corporation (NYSE:CTX) announced today that their respective boards of directors have approved a definitive merger agreement under which Pulte and Centex will combine in a stock-for-stock transaction valued at $3.1 billion.
The combination of these two companies brings together strong brands, sizeable land holdings, and a rich tradition of delivering quality and unmatched levels of customer satisfaction.
In a press release published in the Pulte Homes' investor's corner it reads that "Under the terms of the agreement, Centex shareholders will receive 0.975 shares of Pulte common stock for each share of Centex they own. Based on the closing price of Pulte stock on April 7, 2009, the transaction has a value of $10.50 per Centex share, representing a premium of 32.6% to the 20-day volume weighted average trading price of Centex's shares. The combined company currently would have an equity market capitalization of $4.1 billion and an enterprise value of $7.2 billion. Upon closing of the transaction, Pulte shareholders will own approximately 68% of the combined company, and Centex shareholders will own approximately 32%."
This morning the Pulte Homes shares (PMH) are down close to 6 percent. Forbles comments that "with Pulte shares down 70 cents, or 6.5%, to $10.07 Wednesday morning, the deal was worth $1.2 billion, or $9.82 a share, plus the assumption of $1.8 billion in debt. Centex shares were up $1.79, or 23.5%, to $9.41, trading at a 4.2% discount to the offer price, and there are subtle hints that the housing market may have better days ahead. The Mortgage Bankers Association's weekly measure of loan applications climbed 4.7% in the latest reading, and its purchase index jumped 11.1%, compared with a mild 3.2% increase in refinancing."
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#1 Pulte Homes gets bigger
What it comes to Pulte Homes bigger is not better. Now I have two companies to avoid instead of just Pulte "the mold king" Homes. I have bought several homes built by other builders like KB home and Woodside, but only Pulte Homes Inc. Home I could not live in nor sell.