NEW YORK: Berkshire Hathaway Inc will acquire Taylor Morrison Home Corp in an all-cash deal worth about US$6.8bil, the first major purchase under chief executive Greg Abel and a vote of confidence in the US housing market.
The offer of US$72.50 per common share represents a 24% premium to the home builder’s closing price last Friday.
The Taylor Morrison acquisition is the largest deal since Berkshire bought Occidental Petroleum Corp’s petrochemical business in January.
“We are excited to welcome Taylor Morrison into Berkshire’s portfolio,” Abel said in a statement on Sunday.
“Over time, we expect to unify our site-built home-building operations into a combined platform enabling us to deliver the dream of home-ownership to more Americans.”
The first multibillion-dollar acquisition under Abel, who took over Berkshire Hathaway after legendary investor Warren Buffett retired last year, comes during a period of under-performance for home- builder stocks and as mortgage rates hit the highest since August.
The Omaha, Nebraska-based firm was sitting on a cash pile that reached US$397bil at the end of the first quarter, its highest level ever.
Abel’s comments about unifying Berkshire’s home-building operations over time are “a notable departure” from Berkshire’s trademark strategy of letting acquisitions run independently, said Christopher Davis, a partner at Hudson Value Partners. “Investors will welcome that evolution in approach.”
While investors have expressed support for Abel’s leadership of the sprawling conglomerate, some have been hoping that a deal could support Berkshire’s shares, which have fallen 5.6% this year.
The S&P 500 index has gained 10.7% in the same period.
Taylor Morrison is one of the largest community developers and home-builders in the United States.
The company also offers financial services like home loans, titles, escrow and insurance to consumers, according to the statement. — Bloomberg
