French buyout group PAI Partners is paying €55 a share for KB Home’s entire 50.01 percent stake in Kaufman et Broad, giving the company a market capitalisation of just under €1.3 billion ($1.8 billion).
The shares of Kaufman et Broad are also listed on Euronext and were trading down €0.56 at €57.46 at 10.57 CET. The shares have dropped by nearly 5 percent in the last week since PAI’s bid was brought to the market’s attention, although the share price still remains €2.46 above what PAI has paid for its controlling stake.
A statement from PAI said it intends to make an offer for the remaining shares at the €55 a share price promptly after acquiring the controlling stake.
A PAI spokesman said it would support the existing management and its plans to expand the business including through acquisitions.
The deal is subject to anti-trust clearance and to a €4.83 per share dividend which will be deducted from the €55 price per share.
The European house-building sector is proving popular with private equity. Swedish firm Industri Kapital recently sold Prevesta for SKr 1.9 billion (€204 million, $276 million) generating a return of nearly ten times its initial investment. West Coast Capital, Tom Hunter’s investment vehicle, won out over a Permira-led consortium to buy UK group McCarthy & Stone last year for £1.1 billion (€1.62 billion, $2.2 billion), and went on to acquire Crest Nicholson for £715 million in March.
There has also been consolidation in the industry more generally. Wimpey and Taylor Woodrow have agreed a £2.5 billion merger to create the biggest house-building group in the UK, while Eiffage, France’s third-biggest construction company, is currently fending off a €6.6 billion hostile takeover bid from Spanish rival Sacyr Vallehermoso.