WCI Communities announced the signing of a definitive merger agreement under which Lennar Corporation
OREANDA-NEWS. WCI Communities, Inc. (NYSE: WCIC), a lifestyle community developer and luxury homebuilder, today announced the signing of a definitive merger agreement under which Lennar Corporation (NYSE: LEN and LEN.B), one of the nation's largest homebuilders, has agreed to acquire all of the outstanding shares of WCI common stock in a cash and stock transaction valued at $23.50 per WCIC share. This represents an approximate 37 percent premium to WCI's closing share price on September 21, 2016. WCI's Board of Directors has unanimously approved the transaction, which values WCI at approximately $643 million in equity, or an enterprise value of $809 million.
"Our agreement with Lennar testifies to the legacy and quality of our brand, the attractiveness of our homes and communities, and the talent of our team members," said Keith Bass, President and Chief Executive Officer of WCI Communities. "WCI Communities homebuyers and homeowners can expect a smooth transition and the continuation of the top-tier service they have come to expect from WCI."
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.
Over a legacy that spans more than 60 years, WCI has established a reputation and strong brand recognition for developing amenity-rich, lifestyle master-planned communities catering to move-up, active adult and second-home buyers. During the 12 months ended June 30, 2016, WCI delivered 1,118 homes with an average sales price of $444,000. WCI's home building business is complemented by its real estate brokerage, title and lifestyles amenities businesses.
Mr. Bass added, "The Lennar offer represents immediate and attractive value for our stockholders. In addition, the agreement includes a 35-day 'go-shop' provision that will allow WCI to seek out potentially superior proposals to maximize value for WCI stockholders."
Details of the transaction
The transaction would be in the form of a merger of WCI and a newly formed Lennar subsidiary. Under the terms of the agreement, upon closing, WCI stockholders would receive $11.75 in cash and a fraction of a share of Lennar Class A common stock with a value of $11.75, based on the volume weighted average price of Lennar's Class A common stock on the New York Stock Exchange over the 10 trading days preceding the closing of the merger. The receipt of Lennar stock by WCI stockholders as a result of the merger is expected to be tax free. However, Lennar has the option of increasing the cash portion of the merger consideration, including paying the full $23.50 in cash.
WCI will undertake a 35-day "go-shop" period during which the WCI Board—with the assistance of independent financial and legal advisors—will actively solicit, receive, evaluate and potentially enter into negotiations with parties that offer alternative proposals. There can be no assurance that this process will result in a superior offer. The Company will not disclose developments with respect to the solicitation process unless and until the Board has made a decision with respect to any potential superior proposal. The period commences immediately.
Closing of the transaction is subject to customary closing conditions, including the affirmative vote in favor of the transaction by holders of a majority of the Company's outstanding common stock, which will be sought at a special meeting of WCI stockholders. Subject to the closing conditions and the receipt of no superior proposal, it is anticipated that the meeting to vote on the transaction will be held in December 2016 or January 2017, and, if the transaction is approved, the merger would be expected to close shortly thereafter.
Citigroup Global Markets Inc. and Credit Suisse acted as financial advisors to WCI in connection with the transaction. Credit Suisse will assist WCI in soliciting acquisition proposals in the go-shop process. Latham & Watkins LLP acted as legal counsel to WCI with regard to the transaction.
About WCI Communities
WCI Communities is a lifestyle community developer and luxury homebuilder of single- and multi-family homes, including luxury high-rise tower units, in most of coastal Florida's highest growth and largest markets. With a legacy that spans more than 60 years, WCI Communities has an established expertise in developing amenity-rich, lifestyle-oriented master-planned communities, catering to move-up, active adult and second-home buyers. Headquartered in Bonita Springs, Florida, WCI Communities is a fully integrated homebuilder and developer with complementary real estate brokerage and title services businesses.
About Lennar Corporation
Lennar Corporation, founded in 1954, is one of the nation's largest builders of quality homes for all generations. The Company builds affordable, move-up and retirement homes primarily under the Lennar brand name. Lennar's Financial Services segment provides mortgage financing, title insurance and closing services for both buyers of the Company's homes and others. Lennar's Rialto segment is a vertically integrated asset management platform focused on investing throughout the commercial real estate capital structure. Lennar's Multifamily segment is a nationwide developer of high-quality multifamily rental properties.