Builder Taylor Morrison has agreed to buy rival William Lyon for more $800 million in cash and stock. The deal includes the assumption of debt. As a result, Taylor Morrison shareholders will own 77% of the combined entity, while William Lyon – the remaining.
The $21.45 per share offer will create the fifth-biggest home building company in the United States. The two companies noted that the price represents a premium of 16.7% to the target’s Tuesday close and values William Lyon at $2.4 billion.
William Lyon is an active player on the western US housing market and will expand the Taylor Morrison’s reach into Washington, Oregon and Nevada. This is the sixth acquisition by Taylor Morrison in the past seven years.
“We’ve long aspired to be in the Pacific Northwest and have looked for the right point of entry at the right time and at the right price – and that’s exactly what this represents,” said Taylor Morrison CEO Sheryl Palmer.
Closing of the merger is subject to the satisfaction of customary closing conditions. In connection with the deal, board chairman William Lyon has agreed to vote his 42% stake for the transaction.
Citigroup Global Markets advised William Lyon on the financial matters, while Paul, Weiss, Rifkind, Wharton and Garrison provided legal counsel. Additionally, J.P. Morgan Securities provided financial advice to William Lyon, while Latham and Watkins, acted as its legal adviser.