IRVINE, CA—Two California-based home-builders, Standard Pacific Corp. and Ryland Group Inc. are merging to create a firm with activities in at least 17 states.
The firms told the Associated Press Sunday that their boards of directors had unanimously agreed to go forward with what they called a merger of equals, noting that the merged company would have that would have a market capitalization of about $5.2 billion.
The deal is the first big consolidation move in many years among publicly traded homebuilders, the AP says.
"Combining two industry leaders with nearly 100 years of home-building experience between them puts us in a strong position to benefit from the continued housing market recovery,” Standard Pacific president and CEO Scott Stowell. “With this merger we gain both geographic and product diversification, expanding our reach and enhancing our growth prospects in the entry level, move-up and luxury market segments. Together, we will build homes in 20 of the top 25 MSAs in the United States and will enjoy top 5 market share in 15 of these MSAs."
The AP says Ryland was the fifth-ranked US home-builder last year, based on home closings, while Standard Pacific was 11th. Together, the firms accounted for 12,633 home closings last year, which would make the combined company the fourth-largest residential builder. The top three are D.R. Horton, Lennar Corp. and PulteGroup.
Upon closing of the transaction, Standard Pacific stockholders will own approximately 59% and Ryland shareholders will own approximately 41% of the combined company.
Executives at both firms say the merger will allow the combined firm to sell homes to a broader array of buyers. The new company would also own or control roughly 74,000 land parcels for homes.
"We believe we're in the middle innings of the homebuilding cycle," Stowell said. "We're able to integrate the company, position it with approximately 540 active selling communities, so that we can fully capitalize on the housing market recovery."
Standard Pacific sells homes in California, Arizona, Colorado, Texas, Florida and the Carolinas and caters primarily to move-up buyers, or homeowners looking to sell their home and buy a new one. Ryland sells homes in 17 states and builds homes aimed to everyone from first-time homebuyers to high-end homes.
April new home sales climbed 6.8% to an adjusted annual rate of 517,000. That is still below the 700,000 pace that economists say indicates a healthy market.
Ryland president and CEO Larry Nicholson would become CEO and president of the combined company, which will operate under a new name to be disclosed once the merger is complete. Stowell will become executive chairman of the new company's 10-member board, which will be split between board members from Standard Pacific and Ryland.
Click Associated Press to read the full story.
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David Phillips
David Phillips is a Chicago-based freelance writer and consultant with more than 20 years experience in business and community news. He also has extensive reporting experience in the food manufacturing industry for national trade publications.
