Yesterday, 99.9 percent of CalAtlantic Group Inc. stockholders approved a $9.3 billion merger with its former competitor Lennar Corporation, making it a wholly-owned subsidiary of Lennar.
In the most recent fiscal year, Lennar delivered 29,394 single-family homes to market while CalAtlantic delivered 14,602. Together, the company is now the largest homebuilder in the United States based on revenue.
Lennar CEO Stuart Miller says favorable market conditions made the merger a no-brainer, and the company is poised to lower overhead, increase production efficiency, improve its technology and have consistent underwriting of land acquisition, which will result in $250 million in annual cost savings.
“We are extremely pleased to announce the completion of this strategic combination with CalAtlantic, creating the nation’s leading homebuilder,” said Miller in a statement. “This combination benefits from overall economic strength, driven by low unemployment, rising wages, favorable tax reform, higher consumer confidence and strong housing demand. In this context, the normalization of interest rates should be offset by these favorable economic conditions.”
“This combination brought together two leading homebuilders in familiar markets with compatible product lines,” he added. “With stable to improving market conditions, this combination enables our company to use local market concentration to drive synergies and efficiencies in the most strategic markets in the country.”
Lennar and CalAtlantic specialize in building affordable starter, move-up and retirement homes, and Lennar will now own or control approximately 250,000 homesites and be actively selling homes in approximately 1,300 residential communities across 21 states. Both companies also provide mortgage financing, title insurance and closing services to homebuyers who purchase Lennar or CalAtlantic built homes.
This is Lennar’s second acquisition in a little over a year. In September 2016, the company purchased Florida-based luxury homebuilder WCI Communities, Inc. for $643 million. At the time of the deal, WCI had delivered 1,118 homes with a median sales price of $444,000.