Meritage Homes Corp. Set to Acquire Colonial Homes

Homebuilder Meritage Homes Corp., based in Dallas, Tex., has entered into a definitive agreement to purchase the homebuilding assets of Colonial Homes of Fort Myers, Fla. a privately held builder of single-family homes and condominiums.The acquisition is expected to close within the next week, according to Meritage. Colonial closed 355 homes in 2004 at an average selling price of approximately $347,000, resulting in home closing revenue of $123 million. "Colonial has a solid land position, controlling about 1,800 lots, and an excellent product line," said John Landon, Meritage co-chairman and chief executive officer. "The Colonial culture is compatible with ours, and we are confident that the Colonial management team is capable of growing this division rapidly." Meritage anticipates closing approximately 400 homes in this division in 2005, said Mr. Landon. Tony Persichilli, division president of Colonial, will remain with the company as president of the Fort Myers/Naples division. Meritage is considering refinancing all or a portion of its outstanding $280 million 9 3/4% notes. If completed, this refinancing would result in a significant one-time charge to earnings, but would also result in significant ongoing interest savings, the company said.