KB Home announced this morning (May 17) that it has entered an "exclusivity period" on an offer from PAI Partners to acquire its entire 49% ownership interest in its French subsidiary Kaufman & Broad SA. The sale, which is subject to regulatory approval, would net KB more than $800 million in cash.

"After a thorough review of various strategic alternatives with respect to its French operations, which included conducting a competitive bidding process launched earlier this year, KB Home and its board of directors believe the proposed transaction would be in the best interest of its shareholders," said Jeffrey Mezger, KB Home's president and CEO. "The sale would further KB Home's focus on its core homebuilding operations in the U.S., where long-term prospects are excellent."

Michael Rehaut and the home building and building products team at J.P.Morgan viewed the announcement as a "modest positive" for KB. "While we believe that any transaction would likely be dilutive from an EPS(earnings-per-share) standpoint, result in a higher concentration in its weaker core U.S. operations, and KBH would lose a $15 mil dividend stream, ultimately, the resulting stronger balance sheet would make this transaction a net positive, in our view."