Golden West Homes Gets Buy-Out Bid : William Lyon Co. Offers $9.3 Million; Stock Price Jumps

Times Staff Writer

The William Lyon Co., a major Newport Beach-based home builder, Wednesday offered $9.3 million in cash to purchase the 73.1% of stock in Santa Ana-based Golden West Homes that it doesn't already own.

The offer, announced after the close of trading Wednesday, is to buy all 2.4 million outstanding shares of the manufacturer of mobile homes and factory-built housing for $3.75 per share.

But word of the impending offer apparently leaked to Wall Street ahead of the offer. In trading on the American Stock Exchange on Wednesday, Golden West shares closed at $4.50, up $1.25 a share for the day on volume of 33,600 shares.

Jack D. Steele, dean of the USC School of Business Administration and head of a committee of Golden West directors that will review the Lyon offer, said he believed that if the price is right, the Golden West board would welcome a merger with the William Lyon Co. in hopes that Lyon developments would give Golden West a ready market for its product.

Losses in Recent Years

Like other producers of mobile homes and manufactured housing, Golden West has suffered losses in recent years in large part because of a scarcity of land in Southern California that is zoned for their products.

In its last fiscal year ended May 25, Golden West lost $9.3 million on $58.7 million in sales--which was the third consecutive annual loss for the company. But the company returned to the black in the first quarter of this year, when it showed net income of $166,000 on $18 million in sales.

"This is a wonderful opportunity for the company," Steele said of the Lyon offer. "It is just a question of the fairness of the price. That's what we've got to look at."

William Lyon, chairman and chief executive officer of the privately held William Lyon Co. as well as chairman and the largest individual shareholder of Golden West, also emphasized the potentially beneficial "synergism" between Golden West and his development firm. He said that the use of mobile homes and prefabricated housing could help the William Lyon Co. provide lower-cost housing. He predicted that ultimately such manufactured housing could account for up to 10% of the homes in the company's California developments.

Lyon said the merger could improve Golden West's earnings, which he contends have been harmed by the company's joint venture attempts to develop manufactured home subdivisions. If the merger occurs, he said, Golden West will confine its business to manufacturing.

Steele said that Lyon expressed his interest in acquiring the remainder of Golden West's shares at Golden West's last board meeting, Sept. 26. "It was a surprise to me," said Steele.

However, Lyon, who has been a director of Golden West since 1979 and a shareholder since 1983, said he considered the proposed merger with Golden West to be a logical next step. Lyon told Golden West's board of directors that he expects an answer on the offer by Friday. Steele said the board will seek an outside opinion from an investment banker as to the value of Golden West's stock.

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