Economy

Lennar and CalAtlantic to merger in almost $10B deal

Lennar and CalAtlantic to merger in almost $10B deal”

Lennar Corp said on Monday it was to buy CalAtlantic Group, a smaller rival, in a deal that would create the largest homebuilder in the U.S. valued at about $9.3bn. ( CAA ) in a transaction valued at approximately $9.3 billion, including $3.6 billion of net debt assumed.

The deal is expected to generate annual cost savings/synergies of $250M, with $75M of that to be realized in fiscal 2018. Both companies are publicly traded.

Additional savings, Lennar said, were also expected through production efficiencies, technology initiatives, and the roll out of Lennar's digital marketing and dynamic pricing programmes.

Lennar chief executive Stuart Miller said the merger will increase Lennar's presence in markets it already operates in and allow it to be one of the top three home builders in 24 of the top 30 markets in the country.

The Dallas-based D.R. Horton is now the biggest home builder in the USA, with $12.3 billion in revenues in 2016, according to the industry website Professional Builder.

Ready to get started? Current CalAtlantic shareholders will receive an 0.885 share of Lennar Class A common stock, which was priced at $51.34 per share on the New York Stock Exchange on October 27.

Citi was financial adviser for Lennar while JP Morgan Securities LLC advised CalAtlantic. CalAtlantic stockholders would own about 26 percent of the combined company, according to the release.



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