Denver-based homebuilder MDC Holdings rallied Thursday after Sekisui House, a Japan-based homebuilder, bought further into the U.S. housing market in a $4.9 billion deal.
The agreement givers MDC shareholders $63 a share, a premium of approximately 19% over the stock's closing level on Wednesday. A statement from the companies said the combination would create the fifth-largest builder in the U.S. housing market, based on the number of home units closed in 2022.
The deal is the first purchase of a U.S.-based homebuilder by a Japanese company since 2017. That's when Sekisui bought Woodside Homes, based in Salt Lake City. Also in 2017, Daiwa House Group bought Stanley Martin Communities.
Sekisui has specifically targeted growth in North America, and is moving toward its goal of building 10,000 homes per year outside Japan by 2025. The U.S. housing market remains under tight constraints, as the supply of homes has failed to keep up with population growth.
Most U.S. acquisitions tend to be large, national or regional homebuilders increasing market share by buying out local names. D.R. Horton, for example, bought Conroe, Texas-based ASGi for an unspecified amount in November. In July, D.R. Horton paid $100 million for Gulf Coast builder Truland Homes.
Housing Market Data Due
MDC stock jetted 18% higher in premarket trade. That would lift shares almost to their 2021 high of 63.86. The stock posted its record high of 67.76 in 2005. MDC stock gained 77% in 2023.
MDC stock broke out of a cup-with-handle base in early December. Shares ended Wednesday extended, up 16% from that buy point.
Sekisui trades in the U.S. via American depositary receipts. It was inactive premarket on Thursday, but shares ended Wednesday sitting on a three-month gain of 16%. Sekisui ADRs gained 25% in 2023.
Other homebuilder stocks were generally quiet ahead of Thursday's pending housing market data due from the Commerce Department.
