Pulte and Centex Merge, Hope to Battle Housing Downturn More Successfully

By Anuradha Kher, Online News EditorBloomfield Hills, Mich. and Dallas–Pulte Homes Inc. and Centex Corp. have signed a merger agreement under which Pulte and Centex will combine in a stock-for-stock transaction valued at $3.1 billion, including $1.8 billion of net debt.In 2008, Pulte completed a total of 21,022 unit closings, of which one-quarter or about 5,255 were multifamily units (condominiums and townhomes only). Centex and Punte together delivered more than 39,000 closings with combined pro forma revenues of $11.6 billion. The combined company will have the strongest liquidity position among its peer group with more than $3.4 billion of cash as of March 31, 2009. “Combining the two companies puts us in an excellent position to navigate through the current housing downturn, poised to accelerate our return to profitability,” says Pulte President and CEO Richard J. Dugas, Jr. “The combination will also allow us to capitalize on the opportunities presented by the addition of Centex’s land positions to Pulte’s, including Centex’s sizable holdings in both Texas and the Carolinas, two areas that continue to exhibit strength in the face of today’s difficult housing market.”Centex Chairman and CEO Timothy Eller says, “We are always looking for the best way to deliver more value to all our stakeholders and drive the company forward. We have had a high regard for the Pulte management team and their performance during this downturn.”Pulte expects that efficiency gains and other savings from this transaction should generate cost reductions of approximately $350 million annually, consisting of approximately $250 million in overhead savings and $100 million in debt expense relief, resulting from the expected retirement of debt maturities in excess of $1 billion prior to year-end 2009. Upon completion of the transaction, Dugas will assume the positions of chairman, president and CEO of Pulte Inc. Eller will join the board of directors of Pulte as vice chairman and will serve as a consultant to the company for two years following the close of the transaction. The combined company will use the Pulte name and will be headquartered in Bloomfield Hills but the company also plans to maintain a significant presence in Dallas.