Homebuilder M.D.C. being bought by Japan's Sekisui in a $4.9 billion deal

By Tomi Kilgore

M.D.C. stock shoots up to a 19-year high, as the deal values the shares at 19% premium

Shares of M.D.C. Holdings Inc. rocketed toward a 19-year high Thursday, after the Colorado-based homebuilder announced an agreement to be bought by Japan-based Sekisui House Ltd. in a deal valued at $4.9 billion.

The deal creates the fifth largest homebuilder in the U.S., based on the number of homes closed in 2022.

"MDC will help Sekisui House meet growing U.S. housing needs with enhanced capacity to deliver single-family houses and support customers' increasingly diversified demands - from breaking ground to choosing the specification and finishes in their new homes," the companies said in a statement.

Under the terms of the deal, M.D.C. shareholders will receive $63 in cash for each M.D.C. share they own. That represents an 18.7% premium to Wednesday's closing price of $53.09.

The stock (MDC) shot up 17.4% in premarket trading, putting it on track to open at the highest closing price seen since August 2005. The U.S.-listed shares (SKHSY) (JP:1928) of Sekisui were not yet active in the premarket.

"By leveraging Sekisui House technologies and cutting-edge building practices cultivated in Japan, MDC expects to deliver higher quality houses that enhance its position in the key states in which it operates," the companies said.

The deal is expected to close in the first half of 2024.

"As part of Sekisui House's U.S. family of brands, we expect new opportunities for growth across our footprint for our team members and within our customer offering," said M.D.C. Chief Executive David Mandarich.

M.D.C.'s stock has run up 39.1% over the past three months through Wednesday, while the iShares U.S. Home Construction ETF ITB has rallied 34.7% and the S&P 500 index SPX has gained 9.8%.

Sekisui's U.S. shares have advanced 19.1% over the past three months.

-Tomi Kilgore

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01-18-24 0716ET

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