Expands Presence to 15,067 Combined Home Closings Across 16 States
Advances Sekisui House Global Vision to “Make Home the Happiest Place in the World”
M.D.C. Holdings Shareholders to Receive $63.00 Per Share in All-Cash Transaction Valued at $4.9 Billion
19% Premium to January 17, 2024 Closing Stock Price and 41% Premium to 90-Day VWAP
OSAKA, Japan and DENVER, Jan. 18, 2024 — Sekisui House, Ltd. (“Sekisui House”) (TSE:1928), a top-tier house manufacturer in Japan having delivered over 2.62 million homes worldwide since its establishment, and M.D.C. Holdings, Inc. (“MDC”) (NYSE: MDC), one of the leading homebuilders in the U.S. delivering high-quality homes over the past 50 years, announced today a definitive agreement pursuant to which a wholly-owned subsidiary of Sekisui House will acquire MDC in an all-cash transaction with an equity value of US$4.9 billion (approximately JPY 688 billion at a JPY:USD conversion rate of 140:1). Subject to and in accordance with the terms and conditions of the agreement, MDC shareholders will receive US$63.00 per share in cash, which represents an approximately 19% premium to MDC’s closing stock price on January 17, 2024, the last trading day prior to announcing the transaction, and an approximately 41% premium to MDC’s 90-day volume-weighted average trading price.
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. Through the transaction, MDC will accelerate Sekisui House’s Global Vision to “make home the happiest place in the world” by joining the Sekisui House family of brands that includes Woodside Homes, Holt Homes, Chesmar Homes and Hubble Homes. Upon closing, Sekisui House will become the fifth largest housebuilder in the U.S. (based on the number of houses closed in 2022), helping Sekisui House to achieve its target of supplying 10,000 homes outside of Japan by FY2025, sooner than anticipated.
Yoshihiro Nakai, Representative Director of the Board President, Executive Officer and CEO of Sekisui House, stated, “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. 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.”
Toru Tsuji, CEO of SH Residential Holdings, LLC and Executive Officer of Sekisui House, stated, “Demand for quality homes in the U.S. market remains high and MDC will expand our ability to serve customers in key U.S. states that are poised for continued growth. Through our Global Vision to ‘make home the happiest place in the world,’ we are leveraging Sekisui House technologies to increase the opportunity for customers in the U.S. to purchase quality, environmentally sound homes that they can cherish forever. We look forward to welcoming MDC’s management and employees to the Sekisui House team who will be integral to our continued growth and success.”
Larry Mizel, Founder & Executive Chairman of MDC, stated, “Over the past half-century, our unwavering commitment to excellence has been the cornerstone of our success, benefiting customers, employees, business partners and shareholders. In our remarkable journey, marked by the construction of over 240,000 homes, we’ve emerged as a top 10 homebuilder in the United States. Our ability to navigate through varying housing market cycles while maintaining business resilience speaks to our strategic prowess, and has led not only to the creation of significant shareholder value, but also to an industry-leading dividend yield for our shareholders. Our strategic decision to merge with Sekisui House is a testament to our focus on maximizing shareholder value and delivering significant cash proceeds for our shareholders. Sekisui House’s technology and processes are well-regarded, and we look forward to partnering with a company that shares our belief in delivering customers with high-quality homes and a streamlined, comprehensive homebuying experience.”
David Mandarich, President, CEO and Director of MDC, stated, “MDC, through our Richmond American Homes brand, has been trusted by customers for decades. 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. We thank all of our team members across the organization for their hard work that made this transaction possible and will position the combined company as a leading homebuilder. Sekisui House and its brands are well respected with a reputation for quality, and we look forward to becoming an important part of the portfolio.”
Significant Benefits of the Acquisition
- Creates the fifth largest homebuilder in the U.S. to deliver on growing demand for single-family homes. Demand in the U.S. for new homes is expected to continue to grow as its population grows. Sekisui House will bring to MDC a fully integrated value chain of insights, design, manufacturing, marketing, sales and after-sales services to support efficiency and enhance the homebuyer experience. 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.
- Strengthens relationships with trade partners by expanding Sekisui House technologies cultivated in Japan throughout the U.S. Sekisui House has advanced technology cultivated through its operations in Japan, while MDC has a strong track record of providing high-quality homes for more than 50 years in the U.S. Sekisui House will transfer its technology and innovation, including zero-emission homebuilding processes, to expand its offering of high quality, ESG-conscious products and lifestyle packages to MDC customers at a time when demand for such products is growing. Over time, the transaction is expected to provide new opportunities for economic growth and job creation in the U.S.
- Advances Sekisui House’s global vision to “make home the happiest place in the world.” Sekisui House aims to create homes and communities that last for generations and is currently working to solve social issues through the integration of technologies, lifestyle design and services with a focus on health, connectedness and learning as it advances R&D into new technologies with a focus on the residential domain. Through the acquisition of MDC, Sekisui House will aim to achieve its global vision through providing superior quality homes that ensure comfort, security and peace of mind for customers across the U.S.
- Significant contribution to shareholder value creation for Sekisui House shareholders. Through the transaction, Sekisui House is expected to be poised for long-term growth potential and profitability. Sekisui House expects to realize savings through the transaction primarily through combined procurement and supply chain to deliver enhanced value for Sekisui House’s shareholders.
- Provides new opportunities for MDC’s employees and other stakeholders as part of Sekisui House global portfolio. As part of Sekisui House, MDC will have access to the advantage of a financially strong parent company to support its growth. MDC’s employees and other stakeholders are expected to benefit from this relationship through access to Sekisui House’s extensive offering, capabilities and resources, as well as by becoming an essential part of the service of customers and engagement with communities that drive Sekisui House’s continued success.
Transaction Overview
Subject to and in accordance with the terms and conditions of the merger agreement, which was unanimously approved by the Boards of Directors of both Sekisui House and MDC, a wholly-owned subsidiary of Sekisui House will acquire all outstanding shares of MDC for a price per share of US$ 63.00 in cash. Closing of the acquisition is expected in the first half of 2024, subject to certain conditions, including approval of the merger by MDC’s stockholders, regulatory approvals and other customary conditions. The transaction is not subject to a financing condition.
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 entered into an agreement, among other things, to vote in favor of the transaction subject to and in accordance with the terms and conditions set forth therein.
Advisors
Moelis & Company LLC and Mitsubishi UFJ Morgan Stanley Securities are acting as financial advisors to Sekisui House. Hearthstone, Inc. is acting as real estate advisor to Sekisui House. Morrison Foerster LLP is acting as a legal advisor to Sekisui House.
Vestra Advisors, LLC is acting as exclusive financial advisor to MDC and Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as MDC’s legal advisor. Brownstein Hyatt Farber Schreck, LLP is also assisting MDC as a legal advisor.
About Sekisui House
Sekisui House is a top-tier house manufacturer in Japan, engaging in custom detached houses, rental housing, architectural/civil engineering, remodeling, real estate management, houses for sale, condominiums, urban redevelopment and overseas business, with a global vision to “make home the happiest place in the world”. Having delivered 2,622,745 homes worldwide since its establishment (as of January 31, 2023), Sekisui House has footprints in Japan, the U.S., Australia, Singapore, the U.K. and China. Sekisui House also aims to contribute to solving environmental and social issues as a leading company in ESG management through providing homes.
About M.D.C. Holdings
M.D.C. Holdings, Inc. was founded in 1972. MDC’s homebuilding subsidiaries, which operate under the name Richmond American Homes, have helped more than 240,000 homebuyers achieve the American Dream since 1977. One of the largest homebuilders in the nation, MDC is committed to quality and value that is reflected in each home its subsidiaries build. The Richmond American companies have operations in Alabama, Arizona, California, Colorado, Florida, Idaho, Maryland, Nevada, New Mexico, Oregon, Pennsylvania, Tennessee, Texas, Utah, Virginia and Washington. Mortgage lending, insurance and title services are offered by the following MDC subsidiaries, respectively: HomeAmerican Mortgage Corporation, American Home Insurance Agency, Inc. and American Home Title and Escrow Company. M.D.C. Holdings, Inc. stock is traded on the New York Stock Exchange under the symbol “MDC.”
