Lennar buys CalAtlantic Group in $5.7B deal

NEW YORK — Lennar is buying CalAtlantic Group in a $5.7 billion deal that will create the nation’s largest homebuilder as sales of new homes reach levels not seen in a decade.

The acquisition, which is worth more than $9 billion if $3.6 billion in debt is included, creates a company with a presence in 21 states. The companies had $17 billion in revenue over the last 12 months.

“This combination increases our scale in the markets that we already know and in the products we already offer to entry level, move up and active adult customers,” said Lennar CEO Stuart Miller in a statement. “As a result, the combined company will have a top 3 ranking in 24 of the top 30 markets in the country.”

Lennar Corp. is based in Miami and CalAtlantic Group Inc. is based in Arlington, Virginia.

Homebuilders face rising costs for materials, land, and in the wake of a pair of devastating hurricanes, rising labor costs.

The deal announced Monday is expected to generate annual cost savings of $250 million, with about $75 million in savings expected in fiscal 2018.

Las Vegas’ homebuilding industry is dominated by out-of-state, publicly traded builders, and Lennar and CalAtlantic are among the top sellers in town.

Lennar closed 887 new-home sales in Clark County last year, second-best locally, while CalAtlantic was No. 4 with 724 sales. This year, Lennar is No. 3 with 697 sales, and CalAtlantic is sixth with 437, according to Home Builders Research.

In August, Lennar bought a stretch of land at Lake Las Vegas for a Henderson housing tract. Lennar purchased 22 acres from hedge-fund billionaire John Paulson’s group for that deal.

D.R. Horton Inc. of Texas is currently the nation’s largest homebuilder by revenue. It notched the most new-home sales in Clark County last year at 1,091.

The most recent data from the Commerce Department last week showed that new home sales leapt 18.9 percent in September to a seasonally adjusted annual rate of 667,000, the highest level since October 2007.

The gains came from every region including the South, with a nearly 26 percent boost, where people are replacing homes destroyed or damaged in Hurricanes Harvey and Irma.

Economists believe housing demand will only increase with unemployment rates extraordinarily low.

Surveys of homebuilders reflect growing optimism about demand given the current housing shortage.

The stock deal will give CalAtlantic shareholders 0.885 shares of Lennar stock, with an implied value of $51.34 per share, a 27 percent premium to CalAtlantic’s closing price on Friday.

Current CalAtlantic shareholders will own about 26 percent of the combined company.

Shares of CalAtlantic rose $8.63, or 21.34 percent, to close at $49.07 on Monday. Shares of Lennar fell $2.31, or almost 4 percent, to close at 55.68.

Review-Journal writer Eli Segall contributed to this report.