Taylor Wimpey, the U.K.-based parent company of Taylor Morrison in the United States, is considering selling its North American housing businesses, according to an Oct. 4 report in The Times, a major London paper.
The Times, citing “sources,” said Taylor Wimpey’s executives have not received formal approval from the board for the sale, but that it would be discussed in the next few weeks, and, if approved, it could be formalized before the end of the year.
“In terms of the North American business and the press report, we don’t have any comment on this,” said Taylor Wimpey spokeswoman Anjali Unnikrishnan. Cheryl Palmer, CEO for both Taylor Morrison in the United States and Monarch in Canada, did not immediately return BIG BUILDER's call.
Taylor Wimpey became the largest home builder in Great Britain in July 2007 when Taylor Morrison and George Wimpey merged. Both companies were U.K.-based and had similar, yet complementary operations in the United States where they both operated in Florida, Texas, Arizona, and California.
At the time, the merger was expected to cut £70 million ($137.8 million at the time) in pre-tax expenses during that first year. The combination was expected to increase margins through combined cost efficiencies and business structures.
But the market continued to fall fast and far, and the new combined company found itself heavily in debt and in danger of violating its loan covenants. Last spring, the company struck an agreement to restructure £2.45 billion of debt instruments to better terms after long negotiations.
The restructuring has bought the company some time and space, but its debt level remains high, which has led to talk for some time now that it might sell its North American operations to grant itself even more head room on its debt load.
The company as a whole reported a loss for the first half of 2009 of nearly £682 million. Yet it reported a slight profit of $27.9 million in its North American operations, which includes Canada and the United States.
Taylor Morrison closed 1,279 homes in the first half of the year in the United States, compared with 1,677 in the same period of 2008. Its average sales price fell to $259,000 from $303,000 the year before.
Teresa Burney is a senior editor at BUILDER and BIG BUILDER magazine.
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