The New Home Co.—No. 105 on BUILDER’s 2021 Next 100 list—announced that it has entered into a definitive merger agreement with Apollo Global Management, a global alternative asset manager. Funds managed by Apollo affiliates will acquire the company in an all-cash transaction for $9 per share, which values the builder at an enterprise value of approximately $338 million.
Under the terms of the agreement, which has been unanimously approved by The New Home Co. board of directors, Apollo will commence a tender offer to acquire all outstanding shares of the company. The purchase price represents an 85% premium to the closing stock price on July 22, 2021, of $4.86 per share and a 51% premium to the 90-day, volume-weighted average price.
The holders of approximately 30% of The New Home Co. shares of common stock have agreed to tender their shares to Apollo pursuant to the tender offer in accordance with the terms of a support agreement.
“Over the last several years, we have transformed the company into a growing and diversified builder with operations in three states,” says H. Lawrence Webb, executive chairman of The New Home Co. board of directors. “Apollo’s ability to provide flexible capital and deep knowledge of the home building industry will help us to accelerate the growth of our business. Following a thorough review of the opportunities available to the company, The New Home Co. board of directors unanimously determined that entering into this agreement is the best path forward to maximize value for shareholders.”
Founded in 2009 and became public in 2014, The New Home Co. builds in key markets across California, Arizona, and Colorado. Upon the completion of the transaction, The New Home Co. will become a privately held company and shares of the builder’s common stock will no longer be listed on any public market.
“We are excited to enter into this new chapter together with Apollo, who shares our strategic vision for New Home as a platform for delivering quality homes and communities with award-winning design and unparalleled customer experience,” says Leonard Miller, president and CEO of The New Home Co. “By joining forces with Apollo, we will have the financial flexibility to build on our recent successes and take the company to new heights.”
The closing of the transaction is subject to customary closing conditions, but is expected to close in the second half of the company’s fiscal year. Following the successful completion of the tender offer, Apollo will acquire all remaining shares not tendered in the tender offer through a second-step merger at the same price.
“As consumer demand for new homes accelerates amid limited supply, we continue to see exciting opportunities to invest in the residential housing market,” says Peter Sinensky, partner at Apollo. “New Home’s consumer-driven approach and dedicated focus on integrating unique design and architecture has separated the company as a best-in-class home builder. We are excited to work with the management team to execute on the company’s growth strategy and provide more homes to consumers across the country.”
Citigroup Global Markets is acting as the exclusive financial advisor and Latham & Watkins is acting as legal advisor to The New Home Co. Paul, Weiss, Rifkind, Wharton & Garrison is acting as legal advisor and J.P. Morgan Securities is acting as financial advisor to Apollo Global Management.