(Reuters) - Taylor Morrison Home Corp (TMHC.N) on Wednesday agreed to buy smaller rival William Lyon Homes (WLH.N) for more than $800 million in cash and stock, creating the fifth-biggest homebuilder in the United States.
The offer of $21.45 per share represents a premium of 16.7% to William Lyon’s Tuesday close and is valued at $2.4 billion including debt.
Following the deal, Taylor Morrison said its stockholders will own about 77% of the combined company, with William Lyon shareholders holding the remaining interest. The deal is expected to close in the first half of 2020.
Newport Beach, California-based William Lyon Homes is focused on the western U.S. housing market and will expand Scottsdale, Arizona-based Taylor Morrison’s reach into Washington, Oregon and Nevada.
“We’ve long aspired to be in the Pacific Northwest and have looked for the right point of entry at the right time and at the right price—and that’s exactly what this represents,” Taylor Morrison Chief Executive Officer Sheryl Palmer said.
Citigroup Global Markets Inc was Taylor Morrison’s financial adviser, while Paul, Weiss, Rifkind, Wharton and Garrison LLP was its legal counsel.
J.P. Morgan Securities LLC was the financial adviser to William Lyon Homes, and Latham and Watkins, LLP acted as its legal counsel.
Reporting by Ankit Ajmera in Bengaluru; Editing by Bernard Orr and Anil D'Silva