Pulte, Centex shareholders OK merger to form largest U.S. builder
August 20, 2009
Pulte Home Inc.'s $1.53 billion takeover of rival Centex Corp. was approved by shareholders of both companies, creating the largest homebuilder in the United States.
The new company, with 2008 pro forma closings of 39,000 homes and revenues of $11.6 billion, will operate more than 900 communities across 29 states and the District of Columbia, and will serve all major customer segments through its family of brands that includes Pulte Homes, Centex and Del Webb.
Pulte Homes will retain its corporate headquarters in Bloomfield Hills, Mich. Richard Dugas, Pulte’s president and chairman, will serve as chairman, president and chief executive officer of the combined company.
"Combining these two industry leaders creates tremendous opportunities for our customers, employees and shareholders,” he said. “Our shared commitment to product quality and customer service, combined with the complementary brands, land positions and building models make this a powerful merger that can accelerate our return to profitability.”
Effective with the completion of this merger, Timothy Eller, previously Centex's chairman and chief executive officer, will join the company's board of directors as vice chairman and will serve as a consultant to the company for two years.
Pulte hopes to save $250 million by eliminating operations, staff and offices it doesn't need. It projects another $100 million in savings from paring down interest charges on debt.
Under terms of the merger agreement, Pulte will acquire all outstanding shares of common stock of Centex in a stock-for-stock transaction. Centex shareholders will receive .975 shares of Pulte Homes stock in exchange for each Centex share they own. Based on the exchange rate, Pulte shareholders will own approximately 68 percent of the combined company, and Centex shareholders will own approximately 32 percent.
The combined company surges past Fort Worth, Texas-based D.R. Horton Inc., which builds homes in 27 states and was ranked the top builder in the U.S. last year by Builder magazine. Pulte held the No. 2 spot, followed by Centex.
At the peak of the housing boom in 2005, Pulte built 45,630 homes and Centex 37,022. Last year, both companies built less than half that many.