Kaufman Plans to Spin Off Housing Units
Kaufman & Broad Inc., a major California home builder and insurance company, announced plans Friday to spin off most of its housing operations into a separate publicly held company but said it will retain majority control of the new firm.
Los Angeles-based Kaufman & Broad said it had asked the Securities and Exchange Commission for permission to sell to the public 4.5 million shares of common stock in a company known as Kaufman & Broad Home Corp., which includes its on-site housing business and the adjunct mortgage banking operations.
If the offering goes through, Kaufman & Broad Inc. said it will own 84% of the common stock. The new offering should raise between $65 million and $79 million, based on the expected initial offering price of $14.50 to $17.50 a share.
Proceeds from the sale of 1.6 million of the 4.5 million shares will go to the parent company, while the rest will go to Kaufman & Broad Home Corp., company officials said.
The new offering would leave Kaufman & Broad Inc. in life insurance, which accounted for 54% of its fiscal 1985 revenue, and in manufactured housing, which accounted for 9%. The operations being spun off generated revenue of $339 million last year and profits of $23.1 million.
Company officials noted that the home-building market is booming in California because of the recent drop in mortgage rates. The public sale represents “a pure play” on that strong market, said Norman Metcalfe, the company’s chief financial officer.
Kaufman & Broad is the largest home builder in California and the third largest in France. Sun Life Group of America is the parent company for its life insurance businesses.