Lennar to become biggest home builder in the U.S.

The Miami-based Lennar Corporation, the second-largest home construction company in the U.S., is set to take over the No. One spot.

Lennar and Virginia-based CalAtlantic Group announced a $9.3 billion merger on Monday that would give the new company a top-three position in 24 of the largest metropolitan statistical areas in the U.S., with a combined revenue of $17 billion and equity market capitalization of $18 billion, based on current market prices. Both companies are publicly traded.

The merger would give Lennar and CalAtlantic control of 240,000 home sites and 1,300 active communities in 49 markets across 21 states. The deal would include $3.6 million of debt assumed and will be comprised of 80 percent stock and 20 percent cash.

The joining of the two companies is projected to generate annual cost savings and synergies of $75 million achieved in fiscal year 2018 and $250 million in fiscal year 2019.

The deal is comprised of 80 percent stock and 20 percent cash. Current CalAtlantic shareholders will receive an 0.885 share of Lennar Class A common stock, which was priced at $51.34 per share on the New York Stock Exchange on Oct. 27. The deal translates to a 27 percent premium on CalAtlantic’s closing price that same day. CalAtlantic stockholders will own approximately 26 percent of the combined company.

The Dallas-based D.R. Horton is currently the biggest home builder in the U.S., with $12.3 billion in revenues in 2016, according to the industry website Professional Builder. Lennar is No. Two with $9.5 billion, while CalAtlantic is fourth with $6.3 billion.

This story was originally published October 30, 2017 at 12:05 PM with the headline "Lennar to become biggest home builder in the U.S.."