MDC’s executive chairman Larry Mizel founded the Denver-based builder in 1972.
Sekisui House has agreed to acquire US builder MDC Holdings for $4.95 billion with the deal set to make the Japanese developer the fifth largest homebuilder in the world’s biggest economy.
The Japanese firm said on Thursday that it will pay $63 per share in MDC to acquire 100 percent of the equity in the homebuilder, which represents about a 19 percent premium to the company’s closing price of $53 on Wednesday. The deal represents a windfall for some of the world’s largest asset managers with BlackRock ranking second to MDC founder Larry Mizel’s 14.8 percent stake in the company with a 14.2 percent slice of the builder. Vanguard Group is the third ranking shareholder with 9.3 percent.
“This exciting acquisition of MDC represents a significant advancement of the Sekisui House strategy to expand our US presence and bring the value of our technology, innovation and philosophies to US homebuilding and ultimately to our customers,” said Yoshihiro Nakai, chief executive officer of Sekisui House. “It will also allow us to achieve our goal of supplying 10,000 homes outside of Japan by FY2025, ahead of our initial expectations.”
The MDC acquisition continues Sekisui’s long-established overseas expansion, with the group having first entered the US homebuilding business in 2017 with its acquisition of Utah-based Woodside Homes. In June of last year the Japanese giant further expanded its holdings in the mountains of the western US with its acquisition of Idaho-based builder Hubble Homes.
Expanding US Presence
Scheduled to complete in the first half of the year, the MDC acquisition will raise Sekisui’s footprint in the US homebuilding business to 16 states, with the deal adding Florida, Colorado, Tennessee and Pennsylvania to the Japanese firm’s roster of US markets. BlackRock had last year purchased around 10 million MDC shares for $38.10 each.
In a briefing for investors, Sekisui said that, through the US unit of its high-end modular division Shawood the company will provide MDC with enhanced access to home construction technologies and innovations, such as earthquake resistant home frames and zero-emissions building processes.
Sekisui House president and chief executive officer Yoshihiro Nakai likes to keep things on Mountain Time
”Our strategic decision to merge with Sekisui House is a testament to our focus on maximising shareholder value and delivering significant cash proceeds for our shareholders,” said Larry Mizel, founder and executive chairman of MDC. “Sekisui House’s technology and processes are well-regarded, and we look forward to partnering with a company that shares our belief in delivering customers with high-quality homes and a streamlined, comprehensive homebuying experience.”
Combined, MDC and Sekisui House sold 15,067 homes in 2022, which positions the merged companies to displace Arizona’s Meritage Homes as America’s fifth largest homebuilder post-transaction, according to rankings published by from industry website Builder Online.
Sekisui will fund the all-cash transaction using funds borrowed from the group’s main lenders, which include MUFG Bank and Mizuho Bank.
MDC’s shares closed trading on the New York stock exchange on Friday at $62.64 each, having soared over 70 percent in the past 12 months.
NYSE-listed MDC has delivered over 240,000 houses in 34 metro areas since its inception in 1972. The Denver-based firm had consolidated net sales of $5.7 billion at the end of 2022, up 8 percent from December 2021.
Japanese Builders in the US
Sekisui’s deal to buy out MDC is the latest move by Japan’s largest developers to expand their holdings in the US.
Earlier this month Daiwa House Group announced that it had signed a deal to acquire single-family home builder The Jones Company of Tennessee, with that deal coming after the Osaka-based firm had acquired California-based detached housing specialist JP holdings in October.
In September last year, Sumitomo Forestry acquired 90 percent of the equity in Texas-based multi-family developer JPI Group for $158 million.
In November, Sumitomo Forestry said it was teaming up with California-based Fairfield Residential in a JPY 21.3 billion ($144 million) joint venture to develop a 400-unit rental residential building in the suburbs of Washington, DC.
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