J.F. Shea Jumps in With Bid to Take Over Del Webb

Home builder J.F. Shea Co. on Monday launched a $600-million hostile bid for construction giant Del Webb Corp. that Webb dismissed as “deficient” and analysts saw as a prelude to a takeover battle.

The news sent shares of Phoenix-based Del Webb, which has two other potential suitors waiting in the wings, soaring $4.94 to close at $27.25--a 52-week high--on the New York Stock Exchange. The year’s low was $12. But one analyst told Reuters that, if a bidding war erupts, the shares could skyrocket as high as $50 against the $30 privately owned Shea is offering.

Webb specializes in planning and building retirement communities such as its Sun City developments in California, Arizona and Nevada. Along with many home builders, its share price has under-performed in the market lately due to the cyclical nature of home building and recent boosts in home mortgage interest rates, analysts said.

The under-performing stock price and the fact Webb continues to pump out profit has led privately held Pacific Partners, Avatar Holdings Inc. and now Shea to take an active interest in pursuing the company, analysts said.

In a statement revealing Shea’s bid, Webb Chief Executive Leroy Hanneman said his company would carefully consider the offer, but called it, “deficient in many ways.”

At $30 per share, the deal would be worth about $600 million--a relative bargain for Walnut-based Shea, said Bruce Raabe, chief investment officer at Collins & Co..