Sekisui House Buying MDC For $4.9B, Will Become Fifth-Largest U.S. Homebuilder
Japanese builder Sekisui House has struck a deal to buy MDC Holdings, which builds homes as Richmond American Homes, in an all-cash transaction with an equity value of $4.9B. The deal is expected to close in the first half of this year.
“This exciting acquisition of MDC represents a significant advancement of the Sekisui House strategy to expand our U.S. presence and bring the value of our technology, innovation and philosophies to U.S. homebuilding and ultimately to our customers,” Sekisui House CEO Yoshihiro Nakai said in a statement.
When the deal closes, it will make Sekisui House the fifth-largest single-family homebuilder in the U.S. in terms of number of houses closed in 2022. The deal will also help Sekisui House meet its goal of supplying 10,000 homes outside of Japan by 2025 before its deadline.
This is not Sekisui House's first acquisition of an American homebuilder in the last few years, but it certainly seems to be the largest.
In 2022, a Sekisui House subsidiary bought Houston-based Chesmar Group and its mortgage and title companies for $514M, also in pursuit of the 10,000-home goal. In 2017, it bought Salt Lake City-based Woodside Homes for an undisclosed sum.
Despite a 30-year fixed mortgage rate of about 6%, business hasn't been all bad for U.S. homebuilders. A tight supply of existing homes has boosted stocks of companies that build new houses, Bloomberg said, adding that big builders that have their own mortgage businesses and can offer more attractive terms, such as rate buy-downs, are doing especially well.
Denver-based MDC has its own mortgage lending, insurance and title services. It operates in 16 states including California, Texas and Florida.
An index of publicly traded homebuilders rose nearly 79% between the end of 2022 and the close of trading Wednesday, Bloomberg reported. The index’s gains surpassed those of the broader S&P 500 Index in that period.
