Kaufman & Broad Home Corp. on Monday said it had agreed to buy two small home builders in Houston and Denver for $115 million in cash as part of a plan to bolster the company's position as the largest home builder in the Western U.S.
The Los Angeles-based firm will break into the Houston market by buying Hallmark Residential Group Inc. for about $50 million. In Denver, where Kaufman & Broad already has substantial operations, the firm will buy PrideMark Homes--the area's fifth-largest residential builder--for $65 million. The combined firms will rank as Denver's third-largest builder.
"Both Hallmark and PrideMark fit perfectly with Kaufman & Broad's growth strategy," said Kaufman's chairman and chief executive, Bruce Karatz, in a statement. "The acquisitions are focused in key markets, fulfilling our intentions to enter the Houston market in 1998, as well as greatly increasing our penetration in our existing Denver market."
Both acquisitions are expected to be completed within 30 days, according to Kaufman & Broad.
Kaufman shares rose 88 cents to a 52-week high of $26.88 on the New York Stock Exchange on Monday.
In Houston, the Hallmark Residential acquisition will give Kaufman & Broad access to about 4,700 residential lots. In 1998, the firm is expected to generate revenue of about $73 million and complete 750 homes. Kaufman & Broad wants to boost production to 1,000 units and is planning to open a new-home showroom in the area.
PrideMark completed about 600 homes in Colorado last year.