Japanese builder Sekisui House to acquire MDC for $4.9B

Japanese homebuilder Sekisui House, Ltd. has struck a deal to acquire its U.S.-based peer M.D.C. Holdings, Inc. in an all-cash transaction that values the target at $4.9 billion, the companies announced Thursday. 

The acquisition turns Sekisui into the fifth largest homebuilder in the U.S as it expands the company’s presence to 15,067 combined home closings across 16 states. That’s the second deal of the Japanese company in the country since it acquired Woodside Homes in 2017. 

“This transaction directly aligns with our stated strategy for growth in North America and will create a more resilient portfolio for Sekisui House,” Yoshihiro Nakai, president and CEO of Sekisui House, said in a statement. “It will also allow us to achieve our goal of supplying 10,000 homes outside of Japan by fiscal year 2025, ahead of our initial expectations.” 

Sekisui claims it has delivered over 2.62 million homes worldwide through several brands, including Woodside Homes, Holt Homes, Chesmar Homes and Hubble Homes. MDC said it has built 240,000 homes over the last five decades, emerging as a top 10 homebuilder in the U.S.

The deal is expected to close in the first half of 2024. The company’s boards approved the transaction. Still, it’s subject to approval by MDC’s stockholders, regulatory approvals and other customary conditions. 

Larry Mizel and David Mandarich, who directly or indirectly own approximately 21.2% of MDC’s shares, agreed to vote in favor of the transaction. 

MDC shareholders are expected to receive $63 per share in cash, a 19% premium to the stock’s closing price on Jan. 17. It’s also a 41% premium to the 90-day volume-weighted average trading price.

The transaction comes when the U.S. faces house inventory challenges. Data from Altos Research shows that just over 505,000 single-family homes are on the market across the U.S. this week. 

That’s a 1.2% increase over last week and nearly 7% more than last year at this time. According to Mike Simonsen, president and founder of Altos Research, “Home sellers are starting to ease back into the market,” and “new listings are finally exceeding the levels of a year ago.” 

Regarding the U.S. housing market, Toru Tsuji, CEO of SH Residential Holdings and executive officer of Sekisui House, said that the demand for quality homes “remains high.” 

Following the transaction, Sekisui House will transfer its technology, including zero-emission homebuilding processes, to expand its offering of ESG-conscious products to MDC customers at a time when demand for such products is growing.