Lennar Corporation (NYSE: LEN and LEN.B), Miami, has completed the previously-announced strategic combination with CalAtlantic Group, Inc. (NYSE: CAA).
The transaction, which is in the form of a merger of CalAtlantic into a wholly-owned subsidiary of Lennar, was overwhelmingly approved today by both companies’ stockholders.
Stuart Miller, Lennar CEO, said, “We are extremely pleased to announce the completion of this strategic combination with CalAtlantic, creating the nation’s leading home builder. This combination benefits from overall economic strength, driven by low unemployment, rising wages, favorable tax reform, higher consumer confidence and strong housing demand. In this context, the normalization of interest rates should be offset by these favorable economic conditions.”
Miller continued, “This combination brought together two leading home builders in familiar markets with compatible product lines. With stable to improving market conditions, this combination enables our company to use local market concentration to drive synergies and efficiencies in the most strategic markets in the country.”
“As we articulated previously, the preparation for the integration process has been well underway and our integration team has made tremendous progress on the roadmap to begin achieving direct cost savings, production efficiencies, technology improvement, consistent underwriting of land acquisitions and overhead reduction. As we close this transaction, we are prepared to drive operational excellence by bringing down direct costs and S,G&A expenses, and enhancing shareholder value.”
Miller concluded, “We would like to extend a warm welcome to all of the CalAtlantic associates joining the Lennar family, including Scott Stowell, currently CalAtlantic’s Executive Chairman of the Board, who will join our Board of Directors and Jeff McCall, currently CalAtlantic’s Chief Financial Officer, who will become our new Senior Vice President focusing on corporate services.”
As a result of the combination, Lennar will be the largest home builder in the United States based on revenues. Lennar will own or control approximately 250,000 homesites and be actively selling homes in approximately 1,300 residential communities in 21 states. In its most recent fiscal year, Lennar delivered 29,394 single family homes and CalAtlantic delivered 14,602 single family homes. Both companies also provide mortgage financing, title insurance and closing services to buyers of homes they build and to others. In addition, Lennar’s Rialto segment is a vertically integrated asset management platform, focusing on investing throughout the commercial real estate capital structure. Lennar’s Multifamily segment is a nationwide developer of high quality multifamily rental properties.
As a result of the merger, CalAtlantic stockholders will receive with regard to each share of CalAtlantic common stock, 0.885 shares of Lennar Class A common stock and 0.0177 shares of Lennar Class B common stock. Stockholders had the option to receive $48.26 per share in cash instead of Lennar stock with regard up to 24,083,091 shares, and a major CalAtlantic stockholder had agreed that to the extent stockholders did not elect to receive cash with regard to the maximum number of shares, the major stockholder would receive $48.26 per share in cash for the remainder of the 24,083,091 shares. Therefore, the merger consideration will consist of approximately $1.16 billion in cash, 82,731,943 shares of Lennar Class A common stock and 1,654,639 shares of Lennar Class B common stock. Based on closing prices reported on the New York Stock exchange on Friday, February 9, 2018, the value of the Lennar Class A and Class B common stock that will be issued in the merger totaled $4.9 billion. Lennar may issue additional shares and pay additional cash in the future as a result of conversions of convertible debt securities and exercises of options, restricted stock units and stock appreciation rights that had been issued by CalAtlantic.
Lennar’s strategic combination with CalAtlantic was approved by approximately 99.4% of the Lennar votes that were cast with regard to it and approximately 99.9% of the CalAtlantic shares that were voted with regard to it.
At the Lennar stockholders meeting, Lennar’s stockholders also approved increasing the number of shares of Class A common stock that Lennar is authorized to issue to 400 million shares from the previously authorized 300 million shares.
