Lennar Corporation (NYSE: LEN and LEN.B) on Friday announced the completion of its acquisition of WCI Communities, Inc. (NYSE: WCIC), for approximately $643 million, or $23.50 per share. The purchase includes a portfolio of well-located, owned and controlled land totaling approximately 13,700 home sites, located in most of the highest growth and largest coastal Florida markets, as well as WCI’s complementary real estate brokerage and title services businesses.
Said Stuart Miller, Lennar CEO, “We are very excited to complete the acquisition of this outstanding company. We’d like to extend a warm welcome to the WCI associates who will be joining the Lennar family.”
Miller continued, “Prior to closing, we elected to pay the purchase price in all cash as opposed to using 50% stock. We view this decision as equivalent to a $321 million stock repurchase and chose this structure for various strategic reasons. First, while the use of cash slightly increases our current leverage, the combination of our carefully managed 7-10% target growth rate, soft pivot land strategy and strong profitability and operating cash flow will continue to fortify our balance sheet and position us to end fiscal 2017 with similar leverage to our fiscal 2016 year end. Second, using cash versus stock for the purchase of existing, open for business, established high-margin communities with proven sales, offsets the need to purchase new raw land at retail prices for future growth in these markets. Third, we continue to believe that the housing market remains strong and will continue to gradually improve for the foreseeable future. And finally, we believe our stock is undervalued given our strong core business and the maturity of our ancillary businesses.”
Richard Beckwitt, Lennar president, said, “Through our extensive due diligence process, we have identified many areas where we believe significant synergies will be realized, and we anticipate a very smooth transition for current WCI home buyers. We are looking forward to working with the talented associates from WCI to enhance our home-building operations and ancillary businesses to maximize the opportunities from our combined leading market position in Florida.”
