Pulte-Centex deal creates giant home builder
Wake up and good morning. So, two giant, national home builders prominent in the Tampa Bay area have decided to become one. Is anyone really surprised in this brutal home construction market? Pulte Homes Inc. agreed to acquire Centex Corp. today in a stock-for-stock deal valued at $1.3 billion. The resulting business will be the nation's largest home-building company. (Photo shows Pulte's "Ibis" home model, $179,900 starting price, in Coachman Reserve in Clearwater, courtesy of Pulte.)
The Associated Press reports the companies called the deal a merger, but Pulte stockholders will own about 68 percent of the combined business and Centex shareholders will own the remaining 32 percent. The combined company will use the Pulte name and will be based in Bloomfield Hills, Mich., the current headquarters of Pulte. The companies said the business plans to maintain a significant presence in Dallas, where Centex is based. The deal includes $1.8 billion of debt. Pulte and Centex build homes under such brand names as Fox & Jacobs Homes, Centex Homes, Pulte Homes, DiVosta Homes and Del Webb, which builds homes for the 55+ market.
Pulte CEO Richard J. Dugas Jr., who will run the merged company, said he was optimistic that the combination "puts us in an excellent position to navigate through the current housing downturn."
Clearly there is strength in size and the cost cutting associated with a Pulte-Centex merger. Combined, the companies will be in one of the top three positions among new home builders in 25 of the top 50 U.S. markets.
Both companies have been struggling in an unprecedented housing market, eager to shed excess inventory and much more willing to renegotiate home prices at the settlement table than to have buyers walk away. (Rendering shows Centex's "Rutherford" model home, available in Lutz, priced in the $240,000 range.)
Pulte and Centex, both of which are active builders in the Tampa Bay area -- especially in eastern Hillsborough County area -- plan a Wednesday morning conference call to flesh out the details of their proposed deal. We'll update pending additional insights from the companies.
-- Robert Trigaux, Times Business Columnist