Miami-based Lennar Corp. and CalAtlantic Group Inc. today (10/30) announced that their respective boards of directors have unanimously approved a definitive merger agreement. Under the agreement, each share of CalAtlantic stock will be exchanged for 0.885 shares of Lennar Class A common stock in a transaction valued at approximately $9.3 billion, including $3.6 billion of net debt assumed.
The business combination will create the nation's largest homebuilder, with the last 12 months of revenues in excess of $17 billion and equity market capitalization, based on current market prices, of approximately $18 billion.
The combined company will control approximately 240,000 homesites and will have approximately 1,300 active communities in 49 markets across 21 states.
It is currently anticipated that the transaction will generate annual cost savings and synergies of approximately $250 million, with approximately $75 million achieved in fiscal year 2018. These synergies are expected to be achieved through direct cost savings, reduced overhead costs and the elimination of duplicate public company expenses. Additional savings are also expected through production efficiencies, technology initiatives, and the roll out of Lennar's digital marketing and dynamic pricing programs.
The transaction is expected to close in the first calendar quarter of 2018.
"This combination is first and foremost to enhance shareholder value,” said Stuart Miller, Lennar chief executive officer. “The combined company will have a strong balance sheet and generate significant cash flow available to pay down debt and repurchase shares, which will improve returns on capital and equity."
The transaction is subject to approval by Lennar and CalAtlantic stockholders. Stuart Miller and the Miller Family Trusts have agreed to vote their 41.4% voting interest in Lennar in favor of the merger. MP CA Homes LLC, an affiliate of MatlinPatterson Global Opportunities Partners III L.P., has agreed to vote its 25.4% voting interest in CalAtlantic in favor of the merger.