CalAtlantic Group Inc (NYSE:CAA) stock was flying high today on news of a deal with Lennar Corporation (NYSE:LEN,NYSE:LEN.B).
The deal will have Lennar Corporation acquiring CalAtlantic Group Inc in a deal totaling $9.3 billion. This includes taking on CAA’s net debt of $3.6 billion. It will have each share of CAA stock being exchanged for 0.885 shares of Class A LEN stock.
Lennar Corporation says that the deal to acquire CalAtlantic Group Inc values CAA stock at $51.34 per share. This is based on the closing price of LEN stock on Oct. 27, 2017. The value represents a 27% premium to CAA stock’s closing price on Friday.
Holders of CAA stock have a couple of options with the deal. The first is to allow their shares of CAA stock to be converted into LEN stock. This is the default option. The second is to trade the stock in for $48.26 per share. There’s a maximum cash offer of $1.2 billion for this option.
CalAtlantic Group Inc and Lennar Corporation are expecting synergies between the two companies once the acquisition is complete. The companies are expecting synergies and cost savings of $250 per year from the deal. It will see synergies of $75 million in fiscal 2018.
The deal between CalAtlantic Group Inc and Lennar Corporation has already been given the unanimous approval from both of their Boards of Directors. If the deal can get approval from regulators and shareholders, it will result in the creation of the largest homebuilder in the U.S.
The deal will close in the first quarter of 2018.
CAA stock was up 22% as of Monday morning.
As of this writing, William White did not hold a position in any of the aforementioned securities.
