The $4.9 billion acquisition is expected to close in the first half of 2024, once it is approved by shareholders and regulators.
The Japanese home construction company Sekisui House Ltd. is set to become the fifth largest homebuilder in the United States through its acquisition of the Denver-based homebuilder MDC Holdings Ltd.
The $4.9 billion deal announced Thursday by the two companies is expected to close in the first half of 2024, once it is approved by shareholders and regulators.
“This exciting acquisition of MDC represents a significant advancement of the Sekisui House strategy to expand our U.S. presence and bring the value of our technology, innovation and philosophies to U.S. homebuilding and ultimately to our customers,” Yoshihiro Nakai, CEO of Sekisui House said in a statement. “It will also allow us to achieve our goal of supplying 10,000 homes outside of Japan by FY2025, ahead of our initial expectations. This transaction directly aligns with our stated strategy for growth in North America and will create a more resilient portfolio for Sekisui House.”
MDC is the second United States homebuilder Sekisui House has acquired after its purchase of Woodside Homes in 2017. In addition to the United States and Japan, the company has homebuilding operations in Australia, the United Kingdom, China and Singapore.
MDC, which is the parent company of the homebuilder Richmond American Homes, was founded in 1971 by Larry Mizel and grew over time to be one of the nation’s largest builders of single-family homes.
MDC shareholders will receive $63 per share as part of the deal, equivalent to a 19 percent premium to the stock’s closing price on Jan. 17. MDC stocks jumped an eye-popping 18.2 percent at markets open on Thursday upon news of the announcement.
Demand for newly-built single-family homes has grown considerably over the past year as inventory of existing homes has fallen. Sales of newly built homes were 3.9 percent higher in November 2023 than they were in November 2022, during the same year that sales of existing homes fell to the slowest pace in 30 years amid high prices and high mortgage rates.
“Demand for quality homes in the U.S. market remains high and MDC will expand our ability to serve customers in key U.S. states that are poised for continued growth,” Toru Tsuji, CEO of SH Residential Holdings, said in a statement.
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