By Iris Richmond. Four years after first approaching Nationwide Homes about a possible deal, manufactured-home builder Palm Harbor Homes (NASDAQ/NM: PHHM), based in Addison, Texas, is acquiring the modular manufacturer based in Martinsville, Va. The all-cash purchase of approximately $32 million should be immediately accretive to Palm Harbor's earnings, according to chairman Lee Posey, who adds that the deal is in no way a response to Champion Enterprises' purchase of modular builder Genesis Homes. While modular homes accounted for less than 5 percent of Palm Harbor's business prior to the deal, that figure should quickly rise to around 10 percent, says Posey.
"The acquisition allows for a nationwide approach to the modular business," says Posey. It also will put the company's modular homes in cities that restrict placement of manufactured houses. In addition, he says, buyers of modular homes have an advantage over buyers of manufactured housing in qualifying for conventional 30-year mortgages.
The Nationwide brand name and the management teams, led by Nationwide president Larry Keener, will remain intact. So, too, will Nationwide's distribution system. "Palm Harbor operates at the customized end of the MHI, which is exactly what Nationwide does," says Posey. "We think we're birds of a feather."
Published in BIG BUILDER Magazine, August 2002