KB gets an offer for French unit

From the Associated Press

Home builder KB Home said Friday that an unnamed bidder offered $783.2 million, or $71.85 a share, for its stake in its France-based subsidiary, Kaufman & Broad.

The Westwood-based company, one of the nation’s largest home builders, owns 10.9 million shares in the subsidiary, which accounted for $378.4 million, or 21.4%, of KB Home’s revenue in the first quarter.

KB Home said it was evaluating the offer. It is also looking at other strategic alternatives, including a public or private offering of its shares in the division or keeping the stake, equal to 49% of voting securities in Kaufman.

Like other U.S. home builders, KB Home has seen its sales and bottom line hurt by a housing downturn exacerbated in recent months by a tightening of standards by many lenders.


Outside the U.S., however, housing markets remain strong, so KB Home’s French operation has been a bright spot for the company.

Revenue at the French unit’s housing operations rose 19% during the first quarter over the year-earlier period.

The unit’s deliveries were up 4%, while the average selling price of a home jumped 15% to $241,400.

Given the state of the U.S. housing market, KB Home may be inclined to hold on to its French subsidiary, suggested James Wilson, an analyst with JMP Securities.


“Diversification can be a good thing,” Wilson said.

Still, he added, the company’s board might also see an upside to selling the unit.

“If they can get a whole bunch of cash, they can ... have a war chest for all of the cheap land that’s going to start to show up in the U.S.,” Wilson said. “Selling high in France and buying low in the U.S. would probably be a smart thing to do.”

Shares of KB Home rose $1.24, or 2.8%, to $44.49.