By Iris Richmond. Meritage Corp. will purchase the home building assets of Hammonds Homes, a privately held Houston-based builder that operates in 40 Texas communities. Meritage, a public builder located in Scottsdale, Ariz., and Plano, Texas, just last May announced its goal of acquiring building companies this year.
The purchase, which closed June 30 for $82.8 million, comprises $45.8 million in cash and $37 million in repayment of debt. With an estimated 1,000 homes to be built in Houston in 2003, Meritage could turn into the city's seventh-largest builder. The company's Dallas and Austin operations also will be strengthened by the deal.
Last year, Hammonds sold 935 homes at an average price of $193,000, generating $181.1 million in revenue. Hammonds, established in 1987, will retain its brand name and keep management staff in place, with the exception of CEO Ron Hammonds, who is retiring, according to Meritage co-CEO Steve Hilton. As of July 1, Hammonds' managers report to Hilton's partner, John Landon.
"We've known Ron Hammonds for over 20 years," says Hilton, "and when he approached us in December and told us he was ready to sell, we offered the price he wanted. It's a good fit for us, because both companies target the move-up market." He also says the deal "does not preclude us from making another purchase in 2002."
Published in BIG BUILDER Magazine, August 2002