Taylor Morrison Home Corp. has clinched its fourth major deal in
the past 16 months, establishing itself as more of a buyer than a
seller as the home-building industry consolidates.
Scottsdale, Ariz.-based Taylor Morrison on Tuesday announced it
had purchased the operations of closely held builder Orleans
Homebuilders Inc. in Chicago, Charlotte and Raleigh, N.C., for $166
million in cash.
The deal brings Taylor Morrison, which sold 1,729 homes in the
first quarter, 2,100 home lots in those three markets. Orleans, a
97-year-old builder based in Bensalem, Pa., will retain its largest
division in Philadelphia and parts of New Jersey and New York.
The deal is the latest of several for Taylor Morrison. The
builder and its partners purchased two coveted communities in
California from Lehman Brothers Holdings Inc. for roughly $350
million combined in the past year. Late last year, Taylor Morrison
sold its Canadian operations to Mattamy Homes Ltd. for roughly $285
million.
Taylor Morrison Chief Executive Sheryl Palmer said the Orleans
deal fits with the builder's strategy of expanding in major metro
markets.
"We have outlined a very specific M&A strategy, being
focused on land in the right geographies in core locations in top
performing U.S. markets," Ms. Palmer said in an interview. "For us,
it's about keeping our head down and continuing forward."
Ms. Palmer's comments come against the backdrop of a
home-building industry that some say is poised for consolidation,
given the pending, $5.2 billion merger of builders Standard Pacific
Corp. and Ryland Group Inc. Some analysts expect that the ranks of
23 public U.S. builders will be thinned as smaller competitors
agree to be acquired.
Another factor likely to come into play: Several builders took
on private-equity firms as investors when they needed capital
during the downturn. With the housing market rebounding, some of
those private-equity backers are likely to want an exit strategy.
For example, the Standard Pacific-Ryland merger will provide more
liquidity for Standard Pacific's big investor, MatlinPatterson
Global Advisors LLC.
Orleans, for its part, has hedge-fund backers resulting from its
stint under bankruptcy protection in 2010 and 2011. "It's
beneficial to the shareholders, good for employees and allows a
more concentrated focus on our home market in Philly," Orleans CEO
Alan Laing said.
Taylor Morrison's largest shareholders include TPG Capital,
Oaktree Capital Management LP and JH Investments Inc. Ms. Palmer
declined to speculate on Taylor Morrison's role in future
combinations, other than saying that the builder will continue with
its strategy of expanding in major markets.
Trading of Taylor Morrison's stock closed Monday at $19.70, down
20 cents, or 1%, in 4 p.m. composite trading on the New York Stock
Exchange.
Write to Kris Hudson at kris.hudson@wsj.com
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