- The Washington Times - Thursday, April 9, 2009

NEW YORK | Pulte Homes Inc. is buying Centex Corp. for $1.3 billion in stock in a deal that will create the nation's largest homebuilder and could spark further consolidation in an industry suffering the worst real estate recession in a generation.

The transaction will combine Pulte's strength in active-adult and retirement housing with Centex's hefty market share of first-time homebuyers. The acquisition also will give Pulte large tracts of land in Texas and the Carolinas, two of the most resilient real estate markets, and a presence in 29 states and the District of Columbia.

The new company, which will also include the Del Webb, DiVosta and Fox & Jacobs brand homes, will keep the Pulte name and headquarters in Bloomfield Hills, Mich. There will be an unspecified number of job cuts.

“It allows us to not only survive, but thrive in any economic climate,” said Richard Dugas Jr., Pulte's president and chief executive, who will retain those titles over the combined enterprise.

Faced with a 75 percent slide in new home sales from the peak in mid-2005, homebuilders have slashed construction and prices but have been slow to join forces. Wednesday's deal touched off investors' speculation that other homebuilders with battered stock prices may be easy targets.

This deal “is a game-changer, pure and simple,” said Centex Chairman and Chief Executive Timothy Eller, who will become Pulte's vice chairman and will work as a consultant for two years following the acquisition's completion.

The combined company will have twice the revenue of its next largest rival, D.R. Horton Inc. Pulte and Centex pulled in a total of $11.61 billion in the past 12 months, compared to D.R. Horton's $5.82 billion.

Shares in both companies have lost more than half their value from their 52-week highs last year.

Pulte is offering Centex shareholders 0.975 shares of its common stock for each share of Centex that they own. The transaction is valued at $10.50 per Centex share based on Pulte's Tuesday closing stock price of $10.77. That represents a 38 percent premium to Centex's closing price of $7.62 Tuesday.

Pulte stockholders will own about 68 percent of the combined business and Centex shareholders will own the remaining 32 percent.

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