Orange County icon William Lyon Homes sold to Arizona rival in $2.4B deal – Daily News

on Nov7
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William Lyon Homes, one of Orange County’s oldest independent homebuilders, is merging with Arizona’s Taylor Morrison.

The deal announced on Wednesday, Nov. 6 will create the nation’s fifth-largest home builder, based on 2018 closings.

Here are some answers to questions you might have …

Lyon … the name rings a bell, no? Lyon Homes was founded in 1954 in Newport Beach by Orange County luminary and war hero Gen. William Lyon, who still serves as chairman emeritus. His son William H. Lyon serves as Lyon Homes’ board chairman.

The company was long a leading local builder, but like many in the industry, it suffered after the housing bubble burst a decade ago. The company filed for bankruptcy protection in 2011, and a quick rescue plan got it out of bankruptcy swiftly. The revamped builder went public in 2013.

And this deal’s price? At current stock values plus debt, it’s a $2.4 billion deal. Lyon shareholders will get $2.50 in cash per share and 0.80 shares of Taylor Morrison common stock. The offer of $21.45 per share represents a premium of 16.7% to William Lyon’s Tuesday close.

How are Lyon’s finances? Coming off a record 2018 — $2.1 billion in revenue and 4,186 home sales — Lyon slipped a bit this year. Through 2019’s first three quarters, homes sold are up just 4%; revenues slipped 3% as selling prices weakened; profits were roughly halved.

And the prize asset: 29,000 home lots to build on.

Why did Lyon sell? In recent months Lyon officials have stated they were unhappy with its Wall Street valuation. Hints that those words meant a sale and an improved real estate market — plus this deal — have essentially doubled Lyon’s stock this year to Wednesday’s $20.36 close.

So what’s the plan? Taylor Morrison stockholders would own about 77% of the combined company. The combined company’s estimated homebuilder muscle would include $6.7 billion in yearly revenue, 14,200 homes sold with 83,000 lots owned. And what’s a merger without cost savings: Taylor Morrison estimates $80 million in annualized synergies.

Buyer’s comment? “The agreement to acquire William Lyon Homes marks a historic day for Taylor Morrison as we continue to grow our business in smart and meaningful ways,” Taylor Morrison CEO Sheryl Palmer said. “The combined business provides the unique opportunity to gain local scale and expertise within six months of our major markets, while expanding Taylor Morrison into Washington, Oregon and Nevada.”

Seller’s comment? “The decision to partner with Taylor Morrison was based on shared strategic alignment, like-minded core values, and a long history of integrity,” Matthew Zaist, president and CEO of William Lyon. “We are confident in the success Taylor Morrison demonstrates through its reputation of leadership, quality construction, and unparalleled customer experience, and know our teams, our customers, and our stockholders will be in good hands.”

Next steps? The deal requires approval by both companies’ shareholders. The Lyon family, with 42% of the voting power, says it will vote to accept the offer. If all goes as planned, the deal could close “in the first quarter or early in the second quarter of 2020.”

Reuters contributed to this report.



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