NEW YORK – Pulte Homes Inc. is buying Centex Corp. for $1.3 billion in stock in a deal that will create the nation's largest homebuilder — by far — and could spark further consolidation in an industry that is suffering the worst real estate recession in a generation.
The transaction, which also includes $1.8 billion of debt, will combine Pulte's strength in active-adult and retirement housing with Centex's hefty market share of first-time homebuyers.
The acquisition also will give Pulte large tracts of land in Texas and the Carolinas, two of the most resilient real estate markets, and a presence in 29 states and Washington, D.C.
But Wall Street analysts are concerned about the risk of taking on so much land in other areas where home prices are still plummeting, including Sacramento and Riverside, Calif., and Cape Coral, Fla.
The new company, which will keep the Pulte name and headquarters in Bloomfield Hills, Mich., will have cash reserves totaling $3.4 billion and pay off $1 billion in debt by the end of the year.
"It allows us to not only survive, but thrive in any economic climate," said Richard Dugas Jr., Pulte's president and chief executive, who retain those titles over the combined enterprise.
Pulte and Centex contend that the deal will help them capitalize on what the executives see as the beginning of a recovery in the housing market.
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