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[QUOTE]Originally posted by wallstplaya: [QB] CTX already ran pre-market might try and chase in on a dip-here is the news: BOSTON (MarketWatch) -- Pulte Homes Inc. on Wednesday said it is buying Centex Corp. in an all-stock transaction that will create the largest U.S. home builder as the beleaguered industry tries to ride out the housing slump. The companies have agreed to merge in a $3.1 billion deal, including $1.8 billion of debt. Centex (CTX) shareholders will receive 0.975 share of Pulte (PHM) common stock for each Centex share they own. The deal has a value of $10.50 per Centex share, based on the $10.77 closing price of Pulte shares on Tuesday. Centex shares surged 30% in premarket trading Wednesday after the deal was announced, while Pulte traded to the downside. The companies have scheduled a conference call for Wednesday morning. "Combining these two industry leaders with proud legacies into one company puts us in an excellent position to navigate through the current housing downturn, poised to accelerate our return to profitability," said Pulte President and Chief Executive Officer Richard Dugas, in a press release. "Centex's significant presence in the entry-level and move-up categories is complemented by Pulte's strength in both the move-up and active adult segments," he said. The firms envision $350 million a year in savings, including $250 million from overhead and $100 million in debt expenses. The combined firm will be based in Bloomfield Hills, Mich., but will maintain a significant presence in Dallas, which is where Centex is now based. Pulte shareholders will own about 68% of the combined company, and Centex shareholders will own about 32%. "Pulte and Centex's merger strikes us as a good way to better leverage expenses during a falling revenue environment, although the premium Centex's shareholders are receiving seems small given the persistent valuation gap Centex has had with its peers," wrote Deutsche Bank analyst Nishu Sood in a research note Wednesday morning. He said the main effects of the deal will be cost savings and the acceleration of debt repayment. 'Unrivaled firepower' Dugas will be chairman and chief executive of the combined firm. Centex Chairman and Chief Executive Officer Timothy Eller will be vice chairman. "The combination will also allow us to capitalize on the opportunities presented by the addition of Centex's land positions to Pulte's, including Centex's sizable holdings in both Texas and the Carolinas, two areas that continue to exhibit strength in the face of today's difficult housing market," Dugas said. "We believe this is the right combination at the right time in the business cycle," added Centex's Eller. "By acting decisively now, we're creating unrivaled firepower to capitalize on the opportunities in homebuilding that are now becoming visible on the horizon." In calendar 2008, the two companies combined delivered more than 39,000 homes. The largest U.S. builder, D.R. Horton Inc. (DHI), delivered more than 26,000 homes in its fiscal year ended Sept. 30, 2008. Citi acted as lead financial advisor, and Banc of America Securities, Merrill Lynch and J.P. Morgan Securities Inc. acted as financial advisors to Pulte. Goldman Sachs acted as financial advisor to Centex. Home-builder stocks have been battered during the housing correction, and the industry has seen profits evaporate on declining house prices and sales. The firms have also been saddled with billions of dollars of write-downs on land and inventory. Builder shares have been in a steady decline along with the housing market for more than three years. The iShares Dow Jones U.S. Home Construction Index Fund (ITB), an exchange-traded fund, is off about 9% so far in 2009. [/QB][/QUOTE]
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