Taylor Morrison Home Corp (NYSE: TMHC) have agreed to buy smaller rival William Lyon Homes (NYSE: WLH), which will create the fifth biggest home builder in the United States.
The offer of $21.45 per share represents a premium of 16.7% to William Lyon’s Tuesday close and is valued at $2.4 billion including debt.
Following the finalization of the deal, Taylor Morrison said its stockholders will own about 77% of the combined company. William Lyon shareholders will hold the remaining interest. The deal is expected to close in the first half of 2020.
This merger deal will benefit both parties greatly as it will give regional expansion to local markets in the home building sector.
California based William Lyon will benefit from expansion into Scotsdale, Arizona-based Taylor Morrison’s reach into Washington, Oregon and Nevada.
“We’ve long aspired to be in the Pacific Northwest and have looked for the right point of entry at the right time and at the right price—and that’s exactly what this represents,” Taylor Morrison Chief Executive Officer Sheryl Palmer said.
Citigroup (NYSE: C) Global Markets Inc was Taylor Morrison’s financial adviser, while Paul, Weiss, Rifkind, Wharton and Garrison LLP was its legal counsel.
J.P. Morgan (NYSEARCA: AMJ) Securities LLC was the financial adviser to William Lyon Homes, and Latham and Watkins, LLP acted as its legal counsel.
The merger will give William Lyon a huge platform to expand into the US home building market with much market space left to be captivated.
Competitors such as Lennar Corporation (NYSE: LEN) was reported the biggest US home builder last year, whilst D. R. Horton Inc (NYSE: DHI) followed having published revenues of $18.8 million and $15.7 respectively.
The new home building titan produced from this move should provide stiff competition for the market leaders.
Shares of have climbed 0.054% as a result of this move, as shares currently trade at $18.40. 6/11/19 14:27BST.
Additionally, shares of Taylor Morrison have spiked 0.042% to trade at $23 per share. 6/11/19 14:27BST.
