Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

CALATLANTIC GROUP INC

(CAA)
SummaryChartsNewsCompany 
SummaryMost relevantAll NewsOther languagesPress ReleasesOfficial PublicationsSector news

Lennar buys CalAtlantic to become largest U.S. homebuilder

10/30/2017 | 11:58am EDT
FILE PHOTO: Newly constructed houses built by Lennar Corp are pictured in Leucadia, California

(Reuters) - Lennar Corp (>> Lennar Corporation) will buy smaller rival CalAtlantic Group Inc (>> CalAtlantic Group Inc) for $5.7 billion (£4.3 billion), creating the largest homebuilder in the United States as it strives to deal with higher land acquisition costs and a tighter labour market.

(Reuters) - Lennar Corp (>> Lennar Corporation) will buy smaller rival CalAtlantic Group Inc (>> CalAtlantic Group Inc) for $5.7 billion (£4.3 billion), creating the largest homebuilder in the United States as it strives to deal with higher land acquisition costs and a tighter labour market.

The deal announced by the companies on Monday is the first major merger in the U.S. housing sector in more than two years and will make the unified firm one of the top three homebuilders in 24 of the United States' 30 biggest markets.

Valued at $5.66 billion in stock and shares, plus $3.6 billion in net debt, analysts said the buyout would give Lennar a better foothold in booming housing markets in California from which CalAtlantic drew a third of its revenue last year.

But the move also reflects the pressure on builders due to a shortage of skilled labour that is constraining the supply of homes and pushing costs up even as U.S. house prices rise for a seventh straight year.

CalAtlantic's shares jumped 23 percent after the announcement of the deal, which valued its shares at $51.24 per share a premium of 27 percent to Friday's close, but Lennar's fell almost 3 percent.

"(It's) go big or go home," Credit Suisse analyst Susan Maklari wrote in a note on the deal.

"Builders are increasingly seeking greater volume and cost controls in order to offset higher land and input costs and drive better profitability and returns. Size helps to better manage land and labour constraints."

The deal turns up the heat on sector mergers after a pair of smaller moves by Lennar <WCIC.N> and its biggest rival, D.R. Horton (>> D. R. Horton Inc). It valued the combined firm at $18 billion, compared to Horton's market cap of around $15.6 billion.

The combined company sold 40,792 homes last fiscal year, according to the companies' separate SEC filings versus Horton's 40,309.

Horton shares were broadly flat in morning trade in New York.

Lennar said it would save $75 million in costs next year and $250 million in 2019 in efficiencies due to the merger of the two operations.

"LEN has an opportunity to apply a faster turning production homebuilding approach to CAA’s larger lot positions," BTIG analyst Carl Reichardt wrote in a note.

Citi was financial adviser for Lennar while JP Morgan Securities LLC advised CalAtlantic.

(Reporting by Arunima Banerjee in Bengaluru; Editing by Martina D'Couto, Bernard Orr)

By Arunima Banerjee

Stocks treated in this article : D. R. Horton Inc, Lennar Corporation, CalAtlantic Group Inc

ę Reuters 2017
Stocks mentioned in the article
ChangeLast1st jan.
CALATLANTIC GROUP INC 0.78% 53.12 End-of-day quote.-5.80%
LAND CO., LTD. 0.00% 11 End-of-day quote.37.50%
All news about CALATLANTIC GROUP INC
2018CALATLANTIC HOMESá : Brings Paired And Single Family Home Designs To Mosaic Mast..
PR
2018CALATLANTIC HOMESá : Brings Gated Residential Living To The Heart Of The West Va..
PR
2018CALATLANTICá : Homes Acquires Utah-based Candlelight Homes
PR
2018CALATLANTIC GROUP, INC.á : Reports 2017 Fourth Quarter and Full Year Selected Op..
PR
2018CALATLANTIC HOMESá : Announces Grand Opening Of Sterling At Terramor, Bringing S..
PR
2018FOREMOST COMPANIESá : Announces Grand Opening of Sterling, a New 55+ Neighborhoo..
BU
2017CALATLANTIC GROUP, INC.á : Announces Anticipated Effective Date of Make-Whole Ad..
PR
2017CALATLANTIC HOMESá : Announces Grand Opening Of Windsor Ridge In Joliet, IL
PR
2017CALATLANTIC HOMESá : Debuts New Master-Planned Community In Celina, TX With The ..
PR
2017CALATLANTIC HOMESá : Announces Grand Opening Of Pescara, Offering Premier, Gated..
PR
More news
Chart CALATLANTIC GROUP INC
Duration : Period :
CalAtlantic Group Inc Technical Analysis Chart | MarketScreener
Full-screen chart
Managers and Directors
NameTitle
Richard Beckwitt Chief Executive Officer
Jonathan M. Jaffe President & Chief Operating Officer
Diane J. Bessette CFO, Treasurer, Director & Vice President
Mark Sustana Secretary, Director & Vice President
Sector and Competitors
1st jan.Capitalization (M$)
CALATLANTIC GROUP INC-5.80%0
LENNAR CORPORATION24.16%28 969
NVR, INC.15.14%17 083
M.D.C. HOLDINGS, INC.8.66%3 711
MERITAGE HOMES CORPORATION13.63%3 583
TRI POINTE HOMES, INC.26.43%2 583