Shares of M.D.C. Holdings Inc. soared to a 19-year high following the announcement of an agreement with Japan-based Sekisui House Ltd. to be acquired in a deal valued at $4.9 billion.

Creating the Fifth Largest Homebuilder in the U.S.

The merger between M.D.C. Holdings Inc. and Sekisui House Ltd. will result in the formation of the fifth largest homebuilder in the U.S., based on the number of homes closed in 2022.

Enhancing U.S. Housing Needs

According to a joint statement from both companies, M.D.C. Holdings Inc. will assist Sekisui House in meeting the growing housing demands in the U.S. The deal will enable them to deliver single-family houses and support customers with a wide range of preferences, from groundbreaking to selecting specifications and finishes for their new homes.

Shareholder Benefits in Cash

Shareholders of M.D.C. Holdings Inc. will receive $63 in cash for each share they own, representing an 18.7% premium to the previous day's closing price.

Stock Performance

M.D.C.'s stock showed a significant increase of 17.4% during premarket trading, potentially reaching its highest closing price since August 2005. On the other hand, Sekisui House's U.S.-listed shares were not yet active during premarket.

Expanding Quality and Capabilities

By leveraging Sekisui House technologies and building practices from Japan, M.D.C. Holdings Inc. aims to deliver higher quality houses and solidify its position in key states where it operates.

Expected Closure Date

The deal is set to close within the first half of 2024.

Opportunities for Growth

M.D.C. Holdings Inc.'s Chief Executive, David Mandarich, expressed optimism about the merger's potential to create new growth opportunities for team members and improve the overall customer offering as part of the Sekisui House U.S. family of brands.

Impressive Stock Performance

Over the past three months, M.D.C.'s stock has surged by 39.1%, outperforming the iShares U.S. Home Construction ETF (ITB) which gained 34.7%, and the S&P 500 index (SPX) which climbed 9.8%. Meanwhile, Sekisui House's U.S. shares increased by 19.1% during the same period.

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