Lennar Moves to Acquire WCI Communities

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Shares of WCI Communities Inc. (NYSE: WCIC) saw a handy gain after it was announced that Lennar Corp. (NYSE: LEN) would be acquiring the company. The transaction gives WCI a total equity value of roughly $643 million and an enterprise value of $809 million.

This transaction has been approved by both boards of directors. It is subject to customary closing conditions, including a WCI shareholder vote that is expected to take place in December 2016 or January 2017. If the transaction is approved by the WCI shareholders, it will be completed promptly after the vote.

In terms of the breakdown, Lennar values WCI at $23.50 per share, representing a 37% premium from Wednesday’s closing price. The transaction offers premiums of 31% and 28% from the 50-day ($17.90) and 200-day ($18.31) moving averages, respectively.

The transaction will be in the form of a merger of WCI and a newly formed Lennar subsidiary. The current expectation is that the merger consideration for each WCI share will be $11.75 in cash and a fraction of a share of Lennar Class A common stock with a value of $11.75.

However, Lennar has the option of varying the portions of the $23.50 per share merger consideration that will be cash and Lennar stock, including paying the entire merger consideration in cash. The transaction is structured in a manner intended to cause the receipt of Lennar stock as a result of the merger not to be a taxable event for WCI stockholders.

Stuart Miller, CEO of Lennar, commented:

We welcome the WCI team to the Lennar family. We have long respected the WCI brand and what the company has accomplished. WCI’s land portfolio dovetails perfectly with our own Florida footprint and expands our product offering to capture more of the move-up market.  Our combined presence in the premier coastal Florida markets will drive growth and allow significant cross and dual brand marketing opportunities.

Shares of Lennar were trading up 0.6% at $43.71 on Thursday, with a 52-week trading range of $37.14 to $52.50.

WCI was last seen up 38% at $23.73, with a consensus analyst price target of $21.29 and a 52-week range of $15.41 to $25.00.