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Pulte announced this morning that it would buy it’s rival Centex in a $3.1-billion deal. The acquisition still needs shareholder approval, but if it goes through it would create the nation’s largest homebuilder whose combined closings in 2008 totaled 39,000 homes and earned $11 billion in revenue.
Although both builders have been hammed by the recession, the buyout is expected to save the combined entity $350 million and $100 million in debt relief. Perhaps more importantly, the deal will give Pulte access to Centex-owned land in Texas and North and South Carolina. Labor and material costs being roughly equal, the success or failure of these mega-homebuilders often hinges on how well they can control land costs. And prices will likely never be this low for years to come.
The new company will retain the Pulte name. Details of the stock transactions can be found here.