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Luxury builder goes from bankruptcy to $643M sale

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  • | 4:22 p.m. September 22, 2016
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Miami-based homebuilder giant Lennar Corp. acquired luxury homebuilder and developer WCI Communities for $643 million— a little more than eight years after the Bonita Springs firm filed for Chapter 11 bankruptcy.

WCI's board of directors approved Lennar's offer of $23.50 in cash and stock, split 50-50, for each WCI share, according to a statement. The transaction is based on an enterprise value of $809 million and represents a 37% premium to WCI's Wednesday closing price of $17.6.

Lennar, the second-largest U.S. homebuilder, had $9.74 billion in revenues in 2015. “WCI's land portfolio dovetails perfectly with our own Florida footprint and expands our product offering to capture more of the move-up market," Lennar CEO Stuart Miller says in a separate statement. "Our combined presence in the premier coastal Florida markets will drive growth and allow significant cross and dual brand marketing opportunities."

WCI had $563 million in revenues last year — the continuation of a dramatic recovery going back to 2012, when it had $241 million in sales. WCI filed for bankruptcy in 2008, when its debt was more than half of its capital. The company shed $2 billion in debt and emerged from bankruptcy by 2010. In June 2013 it raised $91 million in an IPO. Earnings were strong in 2014 and 2015, which led to Wall Street acquisition speculation. WCI President and CEO Keith Bass, asked about the speculation in an August 2015 earning conference call, said there was no action on that front. “I don't have any plans on selling the company,” Bass says in a transcript of the call posted on

He also quipped: “We certainly are out there in the M&A front with regard to the A, not too much the other side of it.”

The Lennar-WCI transaction includes a portfolio of WCI-owned or controlled land totaling about 14,200 home sites, located mostly on the Florida coasts. WCI delivered 1,118 homes with an average sales price of $444,000 in the 12 months ended June 30, according to the release. The company, going back 60 years, caters to move-up, active adult and second-home buyers.

“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,” Bass says in the release. “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 deal has one significant caveat: WCI can look for a more lucrative offer. “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 proposal,” the release states. “There can be no assurance that this process will result in a superior offer.”

Pending those 35 days, WCI shareholders are expected to vote on the deal in December or January, and then transaction is subject to customary closing conditions.


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