TRI Pointe Homes Inc. announced a $2.7 billion merger with a larger home-building division than itself, Weyerhaeuser Co. The deal is expected to turn TRI Pointe into one of the nation’s top 10 publicly traded builders in market value.
Irvine, Calif.-based TRI Pointe Homes went public in January, and company officials at the time announced plans to become a bigger player in the housing industry.
TRI sold 254 homes in the first half of the year, and Weyerhaeuser sold 1,708 homes. Weyerhaeuser's brands include Pardee Homes in California and Las Vegas; Maracay Homes in Arizona and Trendmaker Homes in Texas.
“Providing scale in this industry at this point was very important,” Barry Sternlicht, chairman of TRI, told investors during a recent conference call. “There is no question that the home-building market is in for multiple years of expansion.”
The merger is yet another sign of a wave of consolidation in the home-building industry as the housing market recovers.
“Seeking growth at a time when traditional sources of financing are tight, builders are looking to grow through mergers, acquisitions, and by accessing capital through the public markets,” The Wall Street Journal reports.
In just the first half of this year, five builders have offered initial public offerings, and three more are set to debut soon. More builders see going public as a way to access sources of financing at a time when lenders have been less willing to lend on land development.
Source: “Home Builder Clinches $2.7 Billion Deal,” The Wall Street Journal (Nov. 4, 2013)
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