Why Homebuilding Company M.D.C. Holdings Shares Are Rocketing Today

M.D.C. Holdings Inc MDC shares are trading higher after the company disclosed a merger deal with Japan’s Sekisui House.

As per the definitive deal, Sekisui House will acquire MDC in an all-cash transaction for a price per share of $63.00 in cash at an equity value of $4.9 billion (around JPY688 billion at a JPY : USD conversion rate of 140:1).

The deal price represents around a 19% premium to MDC’s closing stock price on January 17, 2024, the last trading day before announcing the transaction, and about 41% premium to MDC’s 90-day volume-weighted average trading price.

The company expects to close the transaction in the first half of 2024, subject to approval of the merger by MDC’s stockholders, regulatory approvals and other customary conditions. 

Post closure, Sekisui House expects to realize savings through the transaction, primarily through combined procurement and supply chain.

Yoshihiro Nakai, Representative Director of the Board President, Executive Officer and CEO of Sekisui House, said, “It will also allow us to achieve our goal of supplying 10,000 homes outside of Japan by FY2025, ahead of our initial expectations. This transaction directly aligns with our stated strategy for growth in North America and will create a more resilient portfolio for Sekisui House.”

Larry Mizel and David Mandarich and certain of their respective affiliates and estate planning vehicles, who beneficially own approximately 21.2% of MDC’s shares, have agreed, among other things, to vote in favor of the transaction.

Also Read: Analyst Upgrades Homebuilders In Anticipation Of A Credit Catalyst Amid Recession Fears

Price Action: MDC shares are up 17.97% at $62.63 on the last check Thursday.

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