SoCal home builders agree to merge

Stan­dard Pa­cific and Ry­land Group tie-up would have a mar­ket cap of $5.2 bil­lion and op­er­ate in 17 states.

Los Angeles Times - - MONDAY BUSINESS - By Nancy Rivera Brooks nancy.rivera.brooks@la­

South­ern Cal­i­for­nia home builders Stan­dard Pa­cific Corp. and Ry­land Group have agreed to merge in a stock trans­ac­tion, cre­at­ing a com­pany that would have an eq­uity mar­ket cap­i­tal­iza­tion of about $5.2 bil­lion and would op­er­ate in 17 states.

The com­bined firm, which hasn’t been named yet, would own or con­trol about 74,000 home sites. The two com­pa­nies’ op­er­a­tions de­liv­ered more than 12,600 homes and had com­bined rev­enue of $5.1 bil­lion in the 12 months that ended March 31.

The merger would en­able the new op­er­a­tion to save $50 mil­lion to $70 mil­lion a year, the com­pa­nies said in a news re­lease is­sued late Sun­day. The com­bi­na­tion would in­crease their geo­graphic reach and abil­ity to con­struct homes at a va­ri­ety of price lev­els, from starter homes to luxury mod­els, Stan­dard Pa­cific and Ry­land said.

“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,” said Scott Stowell, chief ex­ec­u­tive of Irvine-based Stan­dard Pa­cific.

When tal­lied to­gether, the two com­pa­nies build houses in 20 of the na­tion’s top 25 metropoli­tan ar­eas and are among the top five builders in 15 of those ar­eas, he said.

Ry­land Chief Ex­ec­u­tive Larry Ni­chol­son said the two builders have sim­i­lar cul­tures and long his­to­ries and “are each proud of where we’ve been and look to the fu­ture con­fi­dent that we will be bet­ter to­gether.” Ry- land is based in West­lake Vil­lage.

The trans­ac­tion, billed as a “merger of equals,” calls for Stan­dard Pa­cific to con­duct a 1-for-5 re­verse stock split, mean­ing that five shares of the com­pany’s com­mon shares will be com­bined into one. Af­ter that, Ry­land share­hold­ers will get 1.0191 share of Stan­dard Pa­cific stock in ex­change for each Ry­land share.

Stan­dard Pa­cific share­hold­ers will own about 59% of the new com­pany; Ry­land share­hold­ers will own 41%.

The com­bined com­pany’s board of di­rec­tors will con­sist of five cur­rent Stan­dard Pa­cific di­rec­tors, in­clud­ing Stowell, and five cur­rent Ry­land di­rec­tors, in­clud­ing Ni­chol­son. Stowell will be­come ex­ec­u­tive chair­man, and Ni­chol­son will be CEO.

The new com­pany will main­tain a cor­po­rate pres­ence in Cal­i­for­nia and will add a sec­ond cor­po­rate of­fice on the East Coast.

A de­fin­i­tive agree­ment was ap­proved by both com­pa­nies’ boards. The trans­ac­tion is sub­ject to ap­proval by Stan­dard Pa­cific and Ry­land share­hold­ers. The merger is ex­pected to be com­pleted in early fall, the com­pa­nies said.

A merger with Ry­land Group ‘puts us in a strong po­si­tion to ben­e­fit from the con­tin­ued hous­ing mar­ket re­cov­ery.’

—Scott Stowell,

Stan­dard Pa­cific CEO

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