Homebuilders Standard Pacific And Ryland Group To Merge

(RTTNews) - Standard Pacific Corp. (SPF) and Ryland Group Inc. (RYL) have agreed to combine in a merger of equals that would form a company with an equity market capitalization of about $5.2 billion, the two California-based homebuilders said Sunday.

The combined company, with an enterprise value of about $8.2 billion, would own or control about 74,000 homesites. In the 12 months ended March 31, 2015, the pro forma combined company delivered a total of more than 12,600 homes, with combined revenues of $5.1 billion.

The transaction, subject to approval by shareholders of both companies, is expected to close in early Fall 2015.

Upon closing of the transaction, Standard Pacific stockholders will own about 59 percent of the combined company, while Ryland shareholders will own the remaining 41 percent stake.

Scott Stowell, President and CEO of Standard Pacific said, "With this merger we gain both geographic and product diversification, expanding our reach and enhancing our growth prospects in the entry level, move-up and luxury market segments. Together, we will build homes in 20 of the top 25 MSAs in the United States and will enjoy top 5 market share in 15 of these MSAs."

MP CA Homes LLC, Standard Pacific's largest stockholder and an affiliate of MatlinPatterson Global Advisers LLC, has agreed to vote its shares in favor of the transaction.

The combined company, which plans to operate as one brand, will announce its new name prior to the closing of the transaction.

Standard Pacific said it will implement a 1 for 5 reverse stock split at the time of the merger, so that each five shares of its common stock will be combined into one single share.

Following the reverse stock split, Ryland shareholders will receive 1.0191 shares of Standard Pacific common stock for each share of Ryland share. Fractional shares will be paid out in cash.

The companies currently expect annual cost savings of between $50 million and $70 million, with a significant portion of the estimated cost savings expected to be realized by late 2016.

Within the next two years the combined company expects to develop a corporate presence on the east coast, while continuing to maintain a corporate presence in California.

Upon completion of the transaction, Stowell will become executive chairman of the newly formed board of directors, while Ryland President and CEO Larry Nicholson will become the president and CEO.

Current Ryland Chief Operating Officer, Peter Skelly, and current Standard Pacific Chief Financial Officer, Jeff McCall, will serve in these roles for the combined company.

Current Ryland CFO Gordon Milne will retire in connection with the transaction, after assisting with the integration of the two companies.

The ten-member board of directors of the combined company will be split equally between board members from Standard Pacific and Ryland. A final roster of directors will be announced in conjunction with the closing of the merger.

SPF closed Friday's trading at $8.36, up $0.10 or 1.21 percent on a volume of 2.03 million shares.

RYL closed Friday's trading at $42.79, up $0.49 or 1.16 percent on a volume of 300,230 shares.