Lennar Corp. (LEN) to Acquire WCI Communities (WCIC) in ~$643M Deal
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Lennar Corporation (NYSE: LEN) and WCI Communities, Inc. (NYSE: WCIC) today announced that they have entered into a definitive merger agreement under which Lennar will acquire all of the outstanding shares of WCI Communities, Inc. ("WCI") common stock in a cash and stock transaction valued at $23.50 per WCI share, representing a 37% premium to WCI's closing stock price on September 21, 2016.
The transaction gives WCI a total equity value of approximately $643 million and an enterprise value of $809 million.
The transaction will be in the form of a merger of WCI and a newly formed Lennar subsidiary. The current expectation is that the merger consideration for each WCI share will be $11.75 in cash and a fraction of a share of Lennar Class A common stock with a value of $11.75, based on the volume weighted average price of Lennar's Class A common stock on the New York Stock Exchange over the ten trading days preceding the WCI stockholder vote on the merger. However, Lennar has the option of varying the portions of the $23.50 per share merger consideration that will be cash and Lennar stock, including paying the entire merger consideration in cash. The transaction is structured in a manner intended to cause the receipt of Lennar stock as a result of the merger not to be a taxable event for WCI stockholders.
The transaction will combine two of the largest homebuilders in Florida. With a legacy that spans more than 60 years, WCI has established a leading expertise in developing amenity rich, lifestyle master planned communities catering to move-up, active adult and second-home buyers. In the latest 12 months ended June 30, 2016, WCI delivered 1,118 homes with an average sales price of approximately $444,000. The transaction will include a portfolio of owned and controlled land totaling approximately 14,200 homesites, located in most of the highest growth and largest coastal Florida markets.
Stuart Miller, Chief Executive Officer of Lennar, said "We welcome the WCI team to the Lennar family. We have long respected the WCI brand and what the company has accomplished. WCI's land portfolio dovetails perfectly with our own Florida footprint and expands our product offering to capture more of the move-up market. Our combined presence in the premier coastal Florida markets will drive growth and allow significant cross and dual brand marketing opportunities."
Richard Beckwitt, President of Lennar, said "This transaction unites two companies with strong brands, complementary assets, and leading market positions. Keith Bass and his team have built an incredible company, and we're proud to marshal our resources in a deal that accelerates our growth and diversification, generates new strategic product offerings and creates significant value for our shareholders. We look forward to welcoming a very talented group of WCI associates to the Lennar team."
Keith Bass, President and Chief Executive Officer of WCI, said "The transaction is a tribute to the legacy and quality of the WCI brand, the attractiveness of our homes and communities, and the talent of our team members. Lennar is one of the country's finest homebuilders and we are pleased that this transaction provides our shareholders with immediate and attractive value."
The transaction has been approved by the Boards of both Lennar and WCI. Closing of the transaction is subject to customary closings conditions, including the approval by WCI's stockholders. It is anticipated that a meeting to vote on the transaction will be held in December 2016 or January 2017, and, if the transaction is approved by the WCI stockholders, it will be completed promptly after the stockholder vote.
Credit Suisse and Citigroup Global Markets, Inc. served as financial advisers to WCI and provided fairness opinions in connection with the transaction, and Latham & Watkins LLP served as legal advisor, to WCI. Goodwin Procter, LLP acted as legal advisor, and Gibson Dunn & Crutcher, LLP acted as special tax counsel, to Lennar.
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