LONDON, UK / ACCESSWIRE / November 1, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for Lennar Corp. (NYSE: LEN), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=LEN. The Company announced on October 30, 2017, that it has entered into an agreement to acquire CalAtlantic Group, Inc. (NYSE: CAA). The all-stock deal is valued approximately $9.3 billion, including $3.6 billion debt. The Board of Directors of both Companies have already approved the transaction. For immediate access to our complimentary reports, including today's coverage, register for free now at:

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Companies have already approved the transaction.

Transaction details

As per the terms of the merger agreement, Lennar will offer CalAtlantic's shareholders 0.885 shares of Lennar Class A common stock for each share of CalAtlantic. The offer values the price of each Lennar's share at $51.34 per share based on the closing price of Lennar's shares on October 27, 2017. The offer is at a premium of 27% of CalAtlantic's share price at the closing on the same date. CalAtlantic's shareholders also have the option of choosing to get paid in cash for their shares at $48.26 per share instead of Lennar's shares. Lennar has capped the upper limit for cash offers to approximately $1.2 billion. At the close of the transaction, CalAtlantic's stockholders would own approximately 26% stake in the merged entity.

The transaction is expected to close in Q1 2018 and is subject to regulatory and shareholders' approvals, and other closing conditions. Stuart Miller and the Miller Family Trusts who own 41.4% voting interest in Lennar and MP CA Homes LLC, an affiliate of MatlinPatterson Global Opportunities Partners III L.P who own 25.4% voting interest in CalAtlantic have both agreed to vote in favor of the merger. MP CA Homes has informed the Companies that it would opt for the cash for their interest in CalAtlantic to the maximum limit possible. The balance would be paid to MP CA Homes in Lennar shares on pro-rata basis after considering the number of CalAtlantic's shareholders choosing the cash option.

Once the transaction is complete, Scott D. Stowell the current Executive Chairman of CalAtlantic's Board will become a member of Lennar's Board of Directors.

Management comments

Commenting on the acquisition, Stuart Miller, CEO of Lennar, said:

"Our overall Company size and local critical mass will yield significant benefits through efficiencies in purchasing, access to land, labor and overhead allocation to a greater number of deliveries. The combined land portfolio will position the Company for strong profitability for years to come, as we continue to benefit from a solid homebuilding market, supported by job and wage growth, consumer confidence, low levels of inventory, and a production deficit."

Larry Nicholson, President and CEO of CalAtlantic, added:

"Our combination with Lennar underscores the quality and attractiveness of the CalAtlantic brand and people, and the business our talented team has worked hard to build. Lennar is a well-respected name in the homebuilding industry and their team shares a deep commitment to innovation, quality, integrity and a focus on a superior customer experience."

Advantages of the merger

The merger will create one of the largest homebuilder Companies with top 3 ranking in 24 of the top 30 markets in the US. The merged Company is expected to have last twelve months revenues in excess of $17 billion and a market capitalization of approximately $18 billion, based on current market prices. The merged Company will have 240,000 homesites under its control and around 1,300 active communities in 49 markets across 21 states. These communities are where nearly 50% of the US population resides at present.

The merger is expected to be accretive to the Company's earnings after considering deal costs in the fiscal year 2018 and significantly accretive in the fiscal year 2019. The merged entity will have a strong balance sheet and generate significant cash flow which will allow it to reduce the debts and invest in share repurchase programs. The transaction is expected to realize cost savings and synergies of approximately $250 million, out of which approximately $75 million realized in the fiscal year 2018.

About Lennar Corp.

Miami, Florida based Lennar was founded in 1954 and is one the largest builders of quality homes in US and builds affordable, move-up, and retirement homes under the Lennar brand. The Company's financial arm Lennar's Financial Services segment provides mortgage financing, title insurance, and closing services for both buyers of Lennar's homes and others. Lennar's Rialto is a vertically integrated asset management platform invests across various commercial real estate capital structures. Lennar's Multifamily segment is a nationwide developer of high-quality multifamily rental properties.

About CalAtlantic Group, Inc.

CalAtlantic was formed in 2015 with the merger of two homebuilding Companies Ryland and Standard Pacific. It is one of the largest and most respected homebuilders in the US and offers well-crafted homes in thoughtfully designed communities. They cover customers housing needs by providing homebuilding from entry level to luxury, in 43 Metropolitan Statistical Areas spanning 19 states. CalAtlantic utilizes it's over five decades of land acquisition, development, and homebuilding expertise to acquire and build desirable communities in locations that meet the high expectations of the Company's homebuyers.

Last Close Stock Review

Lennar's share price finished yesterday's trading session at $55.67, marginally down 0.02%. A total volume of 8.68 million shares have exchanged hands, which was higher than the 3-month average volume of 2.14 million shares. The Company's stock price soared 3.34% in the last three months, 11.94% in the past six months, and 33.53% in the previous twelve months. Additionally, the stock rallied 29.68% since the start of the year. Shares of the Company have a PE ratio of 16.03 and have a dividend yield of 0.29%. The stock currently has a market cap of $12.94 billion.

At the closing bell, on Tuesday, October 31, 2017, CalAtlantic's stock slightly advanced 0.55%, ending the trading session at $49.34. A total volume of 8.82 million shares have exchanged hands, which was higher than the 3-month average volume of 1.13 million shares. The Company's stock price skyrocketed 38.63% in the last three months, 40.01% in the past six months, and 52.66% in the previous twelve months. Moreover, the stock soared 45.07% since the start of the year. The stock is trading at a PE ratio of 13.73 and has a dividend yield of 0.32%. The stock currently has a market cap of $5.37 billion.

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