Standard Pacific heads east.
By Iris Richmond
With the acquisition of not one, but two Florida companies, Standard Pacific enters its fifth market and its first one east of Texas. The two companies, Miami-based Westbrooke Homes (formerly a subsidiary of Newmark Homes) and Orlando-based Colony Homes, should give the California builder an additional 1,100 units annually.
Standard Pacific president Steve Scarborough describes the cross-country move as deliberate and consistent with the company's strategy to build in strong markets with long-term growth potential.
"When we expand into a new state ? particularly one as far away as Florida ? for us to be successful it's important to have good access to land and subcontractors, which is best accomplished by acquiring companies with people who are strong fixtures in the market," says Scarborough, who is based in Irvine, Calif. "As we continue to grow in the East, acquisition will be the way for us to enter other markets." Standard Pacific, the country's 17th-largest builder, closed 4,311 homes last year in California, Arizona, Colorado, and Texas.
The Westbrooke deal totals $41 million in cash plus the repayment of roughly $54 million in debt. The transaction should add approximately $.10 to $.15 per share in earnings this year, and $.20 to $.25 per share in 2003, the company estimates.
At press time, Standard Pacific was completing due diligence on Colony Homes. The parties agreed to a purchase price of $29 million, payable in a combination of cash and common stock.
Colony targets the affordable housing segment, while Westbrooke's homes start a little higher, ranging from $150,000 to $250,000. Management teams will remain the same under both deals. Both companies will continue to sell homes under their existing names.
Published in BIG BUILDER Magazine, June 2002