=CalAtlantic Group (CAA) and Lennar (LEN) announce merger

• Lennar-CalAtlantic merger creates largest U.S. homebuilder 

CalAtlantic Group and Lennar (LEN) announce merger (80% stock and 20% cash), creating the nation's leading homebuilder; the implied value of the stock consideration is $51.34 per share 

Lennar (LEN) and CalAtlantic (CAA) announced that their respective boards of directors have unanimously approved a definitive merger agreement pursuant to which each share of CalAtlantic stock will be exchanged for 0.885 shares of Lennar Class A common stock in a transaction valued at ~$9.3 billion, including $3.6 billion of net debt assumed. The business combination will create the nation's largest homebuilder with the last twelve months of revenues in excess of $17 billion and equity market capitalization, based on current market prices, of ~$18 billion.

The combined company will control ~240,000 homesites and will have ~1,300 active communities in 49 markets across 21 states, where ~50% of the U.S. population currently lives. It is currently anticipated that the transaction will generate annual cost savings and synergies of ~$250 million, with ~$75 million achieved in fiscal year 2018. These synergies are expected to be achieved through direct cost savings, reduced overhead costs and the elimination of duplicate public co expenses. Additional savings are also expected through production efficiencies, technology initiatives, and the roll out of Lennar's digital marketing and dynamic pricing programs. Each share of CalAtlantic stock will be converted into the right to receive 0.885 shares of Lennar Class A common stock. Based on the closing price of Lennar's Class A common stock on the NYSE on October 27, 2017, the implied value of the stock consideration is $51.34 per share, representing a 27% premium to CalAtlantic's closing price that same day. CalAtlantic's stockholders will also have the option to elect to exchange all or a portion of their shares for cash in the amount of $48.26 per share, subject to a maximum cash amount of ~$1.2 billion. CalAtlantic stockholders will receive Lennar stock unless they exercise an option to receive cash. On a pro forma basis, CalAtlantic stockholders are expected to own ~26% of the combined company. The transaction is expected to close in the first calendar quarter of 2018.

"This combination is first and foremost to enhance shareholder value. The transaction is accretive before deal costs in fiscal year 2018 and significantly accretive in fiscal year 2019. The combined company will have a strong balance sheet and generate significant cash flow available to pay down debt and repurchase shares, which will improve returns on capital and equity." Mr. Miller continued, "This combination increases our scale in the markets that we already know and in the products we already offer to entry level, move up and active adult customers. As a result, the combined company will have a top 3 ranking in 24 of the top 30 markets in the country."