Southern California home builders Standard Pacific Corp. (SPF) and Ryland Group Inc. (RYL) on Monday revealed plans to unite, creating a $5.2 billion company that would rank as the fourth-largest home builder in the United States. Terms of the deal call for Irvine-based Standard Pacific to execute a 1-for-5 reverse stock split and then issue 1.0191 shares for each share of Ryland. Based on Friday closing prices the exchange rate offers little to no premium for holders of Westlake Village-based Ryland. Post-deal Standard Pacific holders would own about 59% of the combination, which will be run by Ryland CEO Larry Nicholson with Standard Pacific CEO Scott Stowell acting as chairman of the board. Current Ryland chief operating officer Peter Skelly and current Standard Pacific CFO Jeff McCall will continue in those roles for the combined company. The companies said the combination would have an enterprise value of about $8.2 billion and own or control about 74,000 home-sites. The two builders together offer neighborhoods from entry level to luxury across 41 markets in 17 states, creating a company that should have the scale and diversity to survive a downturn in any particular geography.
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