Two large home builders merge

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By Jenny Arnold

BLOOMFIELD HILLS, Mich., and DALLAS – Pulte Homes and Centex Corp. announced last week a merger agreement under which Pulte and Centex will combine in a stock-for-stock transaction valued at $3.1 billion, including $1.8 billion of net debt.

In 2008, Pulte and Centex delivered more than 39,000 closings with combined revenues of $11.6 billion. 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, 2009, a news release said.

Pulte and Centex ended March with approximately $1.7 billion of cash each.

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, the transaction has a value of $10.50 per Centex share, representing a premium of 32.6 percent to the 20-day volume weighted average trading price of Centex’s shares.

Upon closing of the transaction, Pulte shareholders will own about 68 percent of the combined company, and Centex shareholders will own about 32 percent.

Pulte Homes is developing Bel Air at Carolina Lakes in Indian Land on Jim Wilson Road. Pulte is the parent company of Del Webb, which is developing Sun City Carolina Lakes in Indian Land.

Centex is building homes in Indian Land’s Edenmoor neighborhood.

“Combining these two industry leaders with proud legacies 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 Chief Executive Officer Richard J. Dugas Jr. “Centex’s significant presence in the entry level and move-up categories is complemented by Pulte’s strength in both the move-up and active adult segments, the latter through our popular Del Webb brand. Together we will have considerable presence in more than 59 markets across America. The combination will also allow us to capitalize on the opportunities presented by the addition of Centex’s land positions to Pulte’s, including Centex’s sizable holdings in both Texas and the Carolinas, two areas that continue to exhibit strength in the face of today’s difficult housing market.”

Centex Chairman and Chief Executive Officer Timothy Eller called the merger a milestone in the industry’s history.

“We share common cultures and rich traditions of delivering quality and value, doing the right thing and exceeding the expectations of our customers,” Eller said. “We’re proud to begin writing this next chapter together.”

The two companies are the industry’s recognized leaders in customer satisfaction, as they are the only homebuilders to have received the Platinum Award from J.D. Power & Associates for excellence in customer satisfaction.

About the                                 two companies

The combined company will use the Pulte name and will be headquartered in Bloomfield Hills, Mich. The company plans to maintain a significant presence in Dallas, according to a press release.

Pulte Homes is one of America’s largest home building companies with operations in 49 markets and 25 states. During its 59-year history, the company has delivered more than 500,000 new homes.

Under its Del Webb brand, Pulte is the nation’s largest builder of active adult communities for people age 55 and older.

Dallas-based Centex, founded in 1950, is one of the nation’s leading home building companies. Its leading brands include Centex Homes, Fox & Jacobs Homes and CityHomes. Centex has ranked among the top three builders on Fortune magazine’s list of “America’s Most Admired Companies” for 10 straight years and is a leader in quality and customer satisfaction.

Contact senior reporter Jenny Arnold at jhartley@thelancasternews.com or at (803) 283-1151