Centex Corp., a Dallas, Texas-based home construction company, will be sold to Pulte Homes Inc. based in Michigan after shareholders approved the sale deal.
After 60 years in business, Centex has to be merged with another company to improve its profitability which was severely affected by the downturn in the housing industry brought about by the increase in the number of Dallas foreclosure homes.
Home construction activity in the Dallas-Fort Worth area was the lowest in decades. Since 2007, single-family house starts declined over 60 percent. The flood of foreclosure properties on the market has resulted to a dramatic drop in home prices and values.
Meanwhile, following the merger, Pulte plans to retain the Fox and Jacobs and Centex brands on various home building projects across the United States. Pulte Chief Executive Officer Richard Dugas disclosed that the company will position both brands to target first-time homebuyers.
Under Pulte's plan, it will focus on providing unique offerings for Fox and Jacobs and Centex brands in about 900 subdivisions located in 29 states.
Dugas said that the goal of the company is to become the largest and most profitable homebuilder in the country. By acquiring Centex, Pulte has expanded its business and eliminated a competitor in the U.S. homebuilding industry.
According to industry analysts, Pulte's acquisition move has allowed it to gain significant market share and access to Fox and Jacobs, City Homes and Centex Homes labels.
Nearly 70 percent of shareholders of Centex approved the sale deal. Under the deal, each Centex share will be exchanged with 0.975 Pulte share. The merged company is 68 percent owned by Pulte shareholders.
Analysts said that the merger will allow Centex to realize cost savings of about $350 million. It also plans to retire as much as $1.5 billion debt.
Meanwhile, a protest was held outside the headquarters of Centex by a group of people who opposed the merger of the two homebuilders. They criticized Pulte's construction practices and Centex for its loan defaults.
For several years, the two homebuilders have been the top housing developers in North Texas. In 2008, Centex had 900 housing starts in the Dallas-Fort Worth area while Pulte had 500. The figures represented a decline from the combined 4,300 housing starts of both companies in 2006.
Author Resource:-> Original Post: Dallas Foreclosure Homes Led to Merger of Centex-Pulte on ForeclosureDeals.com.
Article From Real Estate Pro Articles