The takeover news had come this morning in New York to analysts and investors. The two home-building giants will merge in a tax-free stock swap valued at nearly $1.8 billion. Del Webb will become a Pulte subsidiary, which, with the purchase, will have annual revenues of more than $6 billion.

The transaction value is being based on a 15-day average of Pulte Homes' closing stock price for a period ending three days prior to Del Webb's stockholder meeting in late June. If the average price would be equal to Pulte Homes' closing April 30 stock price of $46.78, the transaction would have an equity value of approximately $800 million, or $40.51 per Del Webb share, subject to adjustment pursuant to the merger agreement.

Pulte Homes also would assume Del Webb's outstanding debt, which had stood at about $1 billion on March 31. Based on the April 30 closing price, Pulte Homes would be required to issue approximately 16 million shares of its common stock to complete the transaction. Pulte Homes' current shareholders would own approximately 73% of the combined company and Del Webb's current shareholders would own approximately 27%.Based on most recent 12-month results, Pulte Homes and Del Webb have delivered an aggregate of more than 28,000 homes in 44 US markets.

With the takeover, Pulte will have the strongest foothold in the residential retirement market. Del Webb operates 10 active adult communities in markets including Phoenix and Tucson; Las Vegas; Palm Desert and Lincoln, CA; Hilton Head, SC; Georgetown, TX; Ocala, FL; and Chicago. The company also builds family and country club communities in Phoenix and Las Vegas. Four of Del Webb's communities currently are ranked in the nation's Top 10 master-planned communities' sales.

"This is a winning combination for both companies' shareholders," says LeRoy C. Hanneman, Del Webb's president and CEO, who will retire when the final papers are inked. "This combination offers unprecedented potential as the unique strengths and attributes of two market leaders are joined."

Pulte Homes estimates efficiency gains and other savings resulting from this transaction should generate cost reductions of approximately $50 million annually. With its dominant position in the senior housing market and 78 million baby boomers nearing retirement age, Del Webb has been an attractive takeover target for more than a year. Just last fall, it beat back a hostile takeover attempt by California-based J.F. Shea Co., which offered $30 a share. In an attempt to appease shareholders and up its stock price, Del Webb had worked to lower overhead and increase profits. Yet the company still has one of the highest debt loads in the industry, 62% debt-to-capital ratio in comparison to Pulte's 40%.

Pulte Homes has operations in 41 US markets, Argentina, Puerto Rico and Mexico, where it is the fifth-largest builder. In the past year, the company has delivered more than 20,000 homes in the nation and in excess of 8,000 homes in Mexico and Puerto Rico.