The UK-based parent companies of Morrison Homes and Taylor Woodrow Homes have agreed to merge, creating the largest home builder in Britain and the 15th biggest in the United States by 2006 closings numbers.
The all-share merged entity, to be called Taylor Wimpey, was announced Monday by George Wimpey plc, Morrison's parent company, and Taylor Woodrow plc. The companies have agreed to a unified management team to be lead by Peter Redfern, Wimpey's chief executive.
In the U.S. market last year Morrison Homes closed 4,347 homes, according to Builder magazine, while Taylor Woodrow closed 2,900. The combined sales of 7,247 would have made the company No. 15 in the country, just behind Toll Brothers (8,601 closings) and ahead of Weyerhaeuser Real Estate Co. (5,836).
The merged companies' combined operations are expected to be able to cut 70 million pounds ($137.8-million) from pre-tax costs in the first financial year. In addition, the new entity would increase margin growth in the UK by combining the cost efficiencies and business structure of George Wimpey with the strategic land development skills of Taylor Woodrow, "reducing the dependence on high sales rate," the companies' announcements say.
For the North American market, the companies' say the merger would increase strength in Florida, California, Arizona, and Texas "where both have highly complementary operations." In addition, the merger would provide a broader product offering through the Taylor Woodrow brand, strengthen the mid-market through Morrison Home, and create greater ability to deploy capital through merged balance sheets.
Under terms of the merger, Taylor Woodrow shareholders would hold 51 percent of the new entity's shares, while George Wimpey shareholders would have the remaining 49 percent.