Lennar Corp. agreed to buy WCI Communities Inc. in a deal that values the Florida real estate company at about $643 million.
Lennar offered $23.50 in cash and stock for each WCI share, according to a statement on Thursday. WCI's board of directors has approved the transaction, which is based on an enterprise value of $809 million, the company said.
Lennar, the second-biggest U.S. homebuilder and one of the industry's most successful firms, is benefiting as low borrowing costs and job growth bolster demand for houses nationwide. Confidence among homebuilders rose to an 11-month high in September, indicating the housing market will continue to advance, according to data from the National Association of Home Builders/Wells Fargo.
Lennar said during a call with investors this week that it plans to increase efforts to reach entry-level buyers, a strategy that has succeeded for companies such as D.R. Horton Inc., the No. 1 homebuilder. Bonita Springs, Fla.-based WCI, develops single- and multi-family homes, including luxury high-rise towers that cater to move-up, and second-home buyers. The company also has real estate brokerage and title services businesses.
The transaction would include a portfolio of owned or controlled land totaling approximately 14,200 home sites, located in most of coastal Florida's highest growth and largest markets, according to the statement. During the 12 months ended June 30, 2016, WCI delivered 1,118 homes with an average sales price of $444,000.
Lennar delivered 6,779 homes in the quarter, with an average selling price of $362,000. New orders rose 8% to 7,018 homes.
WCI will undertake a 35-day period during which the company's board and independent financial and legal advisors will solicit and evaluate alternative proposals.
