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Pulte Homes' merger with Centex Corp. will cost Florida jobs

Two giant home builders with a Tampa Bay area presence dating back to the 1980s are joining forces in a $1.3 billion merger.

The union of Pulte Homes and Centex Corp. combines Pulte's strength in retirement housing with Centex's might with first-time home buyers.

Pulte plans to save $350 million by absorbing Centex. The new company will adopt the Pulte name. The efficiency comes at a price: Integrating the two companies will cost the area jobs.

Pulte employs about 150 in its Central Florida division, which includes Tampa. Close to 70 people work for Centex in west Florida. Overlap is inevitable.

"Neither Centex nor Pulte people have enough to do. So they can trim their overhead, especially staff, and manage the same amount of construction," Tampa Bay area housing analyst Marvin Rose said.

In terms of sales, both companies sit comfortably in the top 10 of builders in the Tampa Bay area. They've also won plaudits for quality, ranking near the top of the J.D. Power and Associates Tampa area customer satisfaction survey.

Tampa hasn't seen such a large merger of home builders since Lennar Homes doubled its size by buying U.S. Home in 2000. Pulte will now be the country's biggest home builder with combined sales of $11.6 billion. The No. 2 builder, D.R. Horton, took in $5.82 billion last year.

"It's a blockbuster," Rose said. "Everybody predicted consolidation of some of the major players in this housing downturn."

But the merger comes with risks. It's happening as home sales stake out their lowest point in decades. Construction has dropped about 75 percent since the peak in 2005-06.

Pulte lost almost $3.73 billion over the past two years, wiping out profits for the previous three boom years. Centex lost $2.66 billion last year, erasing four years worth of earnings.

Florida has been shedding construction workers for nearly three years. In the past year alone, the building industry dropped 115,000 jobs, shrinking by 21 percent.

Pulte took a big hit in 2007 when it bailed from the 14,000-home Wiregrass Ranch project in Wesley Chapel, on the edge of New Tampa. The company plunked down tens of millions in deposits to buy the ranch, but lost that money when it canceled the deal.

Pulte entered the Tampa Bay area 27 years ago by buying Robert Sierra's Criterion Corp., builder of Northdale and Bloomingdale in Hillsborough County. Centex followed Pulte into the local market about the same time, absorbing Karpay Homes in the early 1980s.

By a series of smaller mergers, the companies have broadened their brands. Pulte also runs retirement home builder Del Webb and luxury builder DiVosta. Centex controls the Fox & Jacobs trademark.

The merger raised expectations among investors about other builder takeovers. Beazer Homes, for example, is trading for about a dollar. Its shares, combined with those of Lennar and Hovnanian, all jumped Wednesday.

Times wires contributed to this story.

Pulte Homes' merger with Centex Corp. will cost Florida jobs 04/08/09 [Last modified: Wednesday, April 8, 2009 8:35pm]
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