MIAMI,
Fla. and ARLINGTON, Va., Oct. 30, 2017 /PRNewswire/ --
- Top 3 position in 24 of the 30 largest
MSAs
- Combined revenue in excess of $17
billion and equity market capitalization of $18 billion
- Expect to realize $75
million and $250 million in
synergies in FY 2018 and FY 2019, respectively
- Consideration is approximately 80% stock and 20%
cash
Lennar Corporation (NYSE: LEN and LEN.B) and CalAtlantic Group,
Inc. (NYSE: CAA) today announced that their respective boards of
directors have unanimously approved a definitive merger agreement
pursuant to which each share of CalAtlantic stock will be exchanged
for 0.885 shares of Lennar Class A common stock in a transaction
valued at approximately $9.3 billion, including $3.6 billion of net debt assumed.
The business combination will create the nation's largest
homebuilder with the last twelve months of revenues in excess of
$17 billion and equity market
capitalization, based on current market prices, of approximately
$18 billion. The combined
company will control approximately 240,000 homesites and will have
approximately 1,300 active communities in 49 markets across 21
states, where approximately 50% of the U.S. population currently
lives.
It is currently anticipated that the transaction will
generate annual cost savings and synergies of approximately
$250 million, with approximately
$75 million achieved in fiscal year
2018. These synergies are expected to be achieved through
direct cost savings, reduced overhead costs and the elimination of
duplicate public company expenses. Additional savings are
also expected through production efficiencies, technology
initiatives, and the roll out of Lennar's digital marketing and
dynamic pricing programs.
Under the terms of the merger agreement, each share of
CalAtlantic stock will be converted into the right to receive 0.885
shares of Lennar Class A common stock. Based on the closing price
of Lennar's Class A common stock on the NYSE on October 27, 2017, the implied value of the stock
consideration is $51.34 per share,
representing a 27% premium to CalAtlantic's closing price that same
day. CalAtlantic's stockholders will also have the option to elect
to exchange all or a portion of their shares for cash in the amount
of $48.26 per share, subject to a
maximum cash amount of approximately $1.2
billion. CalAtlantic stockholders will receive Lennar
stock unless they exercise an option to receive
cash. On a pro forma basis, CalAtlantic
stockholders are expected to own approximately 26% of the combined company. The transaction
is expected to close in the first calendar quarter of 2018.
Stuart Miller, Chief
Executive Officer of Lennar, said, "This combination is first and
foremost to enhance shareholder value. The transaction is accretive
before deal costs in fiscal year 2018 and significantly accretive
in fiscal year 2019. The combined company will have a strong
balance sheet and generate significant cash flow available to pay
down debt and repurchase shares, which will improve returns on
capital and equity."
Mr. Miller continued,
"This combination increases
our scale in the markets that we already know and in the products
we already offer to entry level,
move up and active adult
customers. As a result,
the combined company will have a top 3 ranking in 24
of the top 30 markets in the
country."
"Accordingly, our overall
company size and local critical mass will yield significant
benefits through efficiencies in purchasing, access to land, labor
and overhead allocation to a greater number of deliveries. The
combined land portfolio will position the company for strong
profitability for years to come, as we continue to benefit from a
solid homebuilding market, supported by job and wage
growth, consumer confidence, low levels of inventory, and a
production deficit."
Larry Nicholson, President
and Chief Executive Officer of CalAtlantic, said, "Our combination
with Lennar underscores the quality and attractiveness of the
CalAtlantic brand and people, and the business our talented team
has worked hard to build. Lennar is a well-respected name in
the homebuilding industry and their team shares a deep commitment
to innovation, quality, integrity and a focus on a superior
customer experience."
Rick Beckwitt, President of
Lennar, said, "We have great respect for what Scott Stowell, Larry
Nicholson and the CalAtlantic team have accomplished,
building upon the rich legacies of Standard Pacific and
Ryland. Our discussions over the last several months have
only reinforced our conviction that by joining forces, we will
achieve new heights in our industry and create significant value
for all of our shareholders. We share common
cultures and deep traditions of delivering quality and value, doing
the right thing and exceeding the expectations of our
customers. We look forward to executing our
strategy as a larger and even stronger company and welcoming a very
talented group of CalAtlantic associates to the Lennar
family."
The transaction is subject to approval by Lennar and CalAtlantic
stockholders. Stuart Miller and the
Miller Family Trusts have agreed to vote their 41.4% voting
interest in Lennar in favor of the merger. MP CA Homes LLC, an
affiliate of MatlinPatterson Global Opportunities Partners III
L.P., has agreed to vote its 25.4%
voting interest in CalAtlantic in favor of the merger.
Additionally, MP CA
Homes has agreed to exercise
the cash election for at least the number of shares to cause the
maximum cash consideration amount to be fully subscribed
by electing stockholders. Any cash election
by MP CA Homes will be
subject to proration into shares of Lennar Class A common stock,
along with all other stockholders of CalAtlantic, who elect cash,
if the number of cash elections by CalAtlantic stockholders exceeds
the maximum cash amount. Upon completion of the transaction,
Mr. Stowell, CalAtlantic's Executive Chairman, will join the Lennar
Board of Directors.
Citi served as financial advisor for Lennar and Goodwin
Procter LLP acted as Lennar's legal counsel. JP Morgan Securities
LLC served as financial advisor to CalAtlantic and Gibson, Dunn
& Crutcher LLP acted as CalAtlantic's legal counsel.
Conference Call
A conference call to discuss this release will be held at
11:00 a.m. Eastern Time on
October 30, 2017. The call will
be accessible via telephone by dialing 517-308-9039 and entering
5723593 as the confirmation number. A presentation for the call can
be accessed through Lennar's website at www.lennar.com. A replay of the
conference call will also be available later that day by dialing
203-369-3781.
About Lennar
Lennar Corporation, founded in 1954, is one of the
nation's largest builders of quality homes for all generations.
Lennar builds affordable, move-up and retirement homes primarily
under the Lennar brand name. Lennar's Financial Services segment
provides mortgage financing, title insurance and closing services
for both buyers of Lennar's homes and others. Lennar's Rialto
segment is a vertically integrated asset management platform
focused on investing throughout the commercial real estate capital
structure. Lennar's Multifamily segment is a nationwide developer
of high-quality multifamily rental properties. Previous press
releases and further information about Lennar may be obtained at
the "Investor Relations" section of Lennar's website,
www.lennar.com.
About CalAtlantic
CalAtlantic Group, Inc., one of the nation's largest and
most respected homebuilders, offers well-crafted homes in
thoughtfully designed communities that meet the desires of
customers across the homebuilding spectrum, from entry level to
luxury, in 43 Metropolitan Statistical Areas spanning 19
states. With a trusted reputation for quality craftsmanship,
an outstanding customer experience and exceptional architectural
design earned over its 50 year history, CalAtlantic Group, Inc.
utilizes its over five decades of land acquisition, development and
homebuilding expertise to acquire and build desirable communities
in locations that meet the high expectations of the company's
homebuyers. Additional information about CalAtlantic
Group, Inc. is available by visiting
www.calatlantichomes.com.
Forward Looking Statements
Some of the statements in this press release are
"forward-looking statements," as that term is defined in the
Private Securities Litigation Reform Act of 1995, including
statements regarding the expected time of the completion of the
transaction. These forward-looking statements,
which are based on current expectations, estimates and projections
about the industry and markets in which Lennar and
CalAtlantic operate and beliefs of and assumptions
made by Lennar management and CalAtlantic
management, involve uncertainties that could significantly
affect the financial results of Lennar or
CalAtlantic or the combined company. Words such as
"expects," "anticipates," "intends," "plans," "believes," "seeks,"
"estimates," and variations of such words and similar expressions
are intended to identify such forward-looking statements, which
generally are not historical in nature. Such forward-looking
statements include, but are not limited to, statements about the
anticipated benefits of the proposed merger between
Lennar and CalAtlantic, including future
financial and operating results, the attractiveness of the value to
be received by CalAtlantic stockholders, the combined company's
plans, objectives, expectations and intentions, and the percentage
the CalAtlantic stockholders are expected to own of the combined
company. All statements that address operating performance, events
or developments that we expect or anticipate will occur in the
future — including statements relating to expected synergies,
improved market positioning and ongoing business strategies — are
forward-looking statements. These statements are not guarantees of
future performance and involve certain risks, uncertainties and
assumptions that are difficult to predict. Although we believe the
expectations reflected in the forward-looking statements are based
on reasonable assumptions, we can give no assurance that our
expectations will be attained and therefore, actual outcomes and
results may differ materially from what is expressed or forecasted
in such forward-looking statements. Some of the
factors that may affect outcomes and results include, but are not
limited to: (i) Lennar's and CalAtlantic's ability to obtain
requisite approval from their respective stockholders; (ii)
Lennar's and CalAtlantic's ability to satisfy the conditions to
closing of the proposed merger; (iii) the occurrence of any event,
change or other circumstances that could give rise to the
termination of the merger agreement; (iv) availability of financing
and capital; (v) failure to realize the benefits expected from the
proposed acquisition; (vi) the risk that the cost savings and any
other synergies from the acquisition may not be fully realized or
may take longer to realize than expected; (vii) failure to promptly
and effectively integrate the acquisition; (viii) other risks
related to the completion of the proposed merger and actions
related thereto; and (ix) the risks detailed in CalAtlantic's and
Lennar's filings with the Securities and Exchange Commission (the
"SEC"), including the "Risk Factors" sections of CalAtlantic's
Annual Report on Form 10-K for the year ended December 31,
2016 and Lennar's Annual Report on Form 10-K for the fiscal year
ended November 30, 2016, and their respective most recent
Quarterly Reports on Form 10-Q. There can be no assurance
that the merger will be completed, or if it is completed, that it
will close within the anticipated time period or that the expected
benefits of the merger will be realized. It is not possible for the
management of either company to predict all the possible risks that
could affect it or to assess the impact of all possible risks on
the two companies' businesses. Neither Lennar nor
CalAtlantic undertakes any duty to update any forward-looking
statements appearing in this document.
Additional Information about the Proposed Merger and
Where to Find It
This communication relates to the proposed merger pursuant
to the terms of the Agreement and Plan of Merger, dated as of
October 29, 2017, by and among
CalAtlantic Group, Inc., Lennar Corporation and Cheetah Cub Group
Corp.
In connection with the proposed merger, Lennar expects to
file with the SEC a registration statement on Form S-4 that will
include a joint proxy statement of Lennar and CalAtlantic that also
constitutes a prospectus of Lennar, which joint proxy
statement/prospectus will be mailed or otherwise disseminated to
Lennar and CalAtlantic stockholders when it becomes available.
Lennar and CalAtlantic also plan to file other relevant documents
with the SEC regarding the proposed merger. INVESTORS ARE URGED
TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT
DOCUMENTS FILED WITH THE SEC IF AND WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
MERGER. You may obtain a free copy of the joint proxy
statement/prospectus (if and when it becomes available) and other
relevant documents filed by Lennar and CalAtlantic with the SEC at
the SEC's website at www.sec.gov. Copies of the documents filed by
Lennar with the SEC will be available free of charge on Lennar's
website at www.lennar.com or by
contacting Allison Bober, Investor
Relations, at 305-485-2038. Copies of the documents filed by
CalAtlantic with the SEC will be available free of charge on
CalAtlantic's website at
www.calatlantichomes.com or by contacting
Michelle Varela, Investor Relations,
at 949-789-1651.
Certain Information Regarding
Participants
Lennar and CalAtlantic and their respective directors and
executive officers and other members of management and employees
may be deemed to be participants in the solicitation of proxies in
respect of the proposed merger. You can find information about
Lennar's executive officers and directors in Lennar's definitive
proxy statement filed with the SEC on March
7, 2017 in connection with its 2017 annual meeting of
stockholders and in Form 4s of Lennar's directors and executive
officers filed with the SEC. You can find information about
CalAtlantic's executive officers and directors in CalAtlantic's
definitive proxy statement filed with the SEC on March 31, 2017 in connection with its 2017 annual
meeting of stockholders and in Form 4s of CalAtlantic's directors
and executive officers filed with the SEC. Additional information
regarding the participants in the proxy solicitation and a
description of their direct and indirect interests, by security
holdings or otherwise, will be included in the joint proxy
statement/prospectus and other relevant documents filed with the
SEC if and when they become available. You may obtain free copies
of these documents from Lennar or CalAtlantic using the sources
indicated above.
No Offer or Solicitation
This document shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the U.S.
Securities Act of 1933, as amended.
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SOURCE Lennar Corporation