LONDON (ShareCast) - (ShareCast News) - Shares in US housebuilder CalAtlantic surged in pre-market trade on Monday after it and peer Lennar Corp announced a definitive merger agreement in a deal valued at around $9.3bn, including debt.
Under the terms of the agreement, each CalAtlantic share will be valued at about $51.34, representing a premium of 27% to its closing price on Friday.

The companies said the combination will create "the nation's largest homebuilder" with the last twelve months of revenues in excess of $17bn and equity market capitalisation, based on current market prices, of approximately $18bn. The combined company will control around 240,000 homesites and will have approximately 1,300 active communities in 49 markets across 21 states, where approximately 50% of the US population currently lives.

The deal is expected to generate annual cost savings and synergies of around $250m, with approximately $75m 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.

Lennar chief executive Stuart Miller said: "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.

"This combination increases our scale in the markets that we already know and in the products we already offer to entry level, move up and active adult customers. As a result, the combined company will have a top 3 ranking in 24 of the top 30 markets in the country."

Larry Nicholson, president and chief executive officer of CalAtlantic, said: "Our combination with Lennar underscores the quality and attractiveness of the CalAtlantic brand and people, and the business our talented team has worked hard to build. Lennar is a well-respected name in the homebuilding industry and their team shares a deep commitment to innovation, quality, integrity and a focus on a superior customer experience."

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE