US house builders Ryland and Standard Pacific have agreed to merge in an all-share deal. The new company will have pro-forma sales of some US$ 5.1 billion, making it one of the largest residential developers in the US.
Under the terms of the deal, Ryland will be rolled into Standard Pacific by means of a share swap. Standard Pacific will first carry out a 5-for-1 reverse share split. It will then exchange 1.0191 of these shares for every single share of Ryland stock. This will see Standard Pacific shareholders own 59% of the new entity, while Ryland’s owners will have 41%.
The ten-strong board of the new company will have five members nominated by Standard pacific and five by Ryland. The current Standard Pacific CEO, Scott Stowell, will be executive chairman of the new entity. Ryland’s CEO, Larry Nicholson, will be president and CEO of the new company.
Annual cost savings of US$70 million to US$ 90 million are expected to result from the merger, and the new company is expected to have a value of some US$ 5.2 billion.
The two companies are said to be a good geographic fit. Standard Pacific focuses on California, while Ryland’s footprint is predominately in the northeast and Midwest of the US. The two companies said that the combined entity would have a presence in 20 out of 25 of the largest metropolitan areas in the US.