KB Home to sell French unit stake for $738 million

NEW YORK (Reuters) - KB Home (KBH.N), the fifth-biggest U.S. home builder, said on Wednesday it had agreed to sell its 49 percent stake in its French unit, Kaufman & Broad KBH.PA, to private equity firm PAI Partners for about $738 million (547 million euros).

Los Angeles-based KB Home, whose shares have been hurt by a slowdown in the U.S. housing market, said last week it had entered into exclusive talks with PAI to sell its 10.9 million shares in the French unit.

The purchase price consists of 50.17 euros per share ($67.70) in cash to be paid by PAI to KB Home after payment of a cash dividend of 4.83 euros per share ($6.52) by Kaufman & Broad. The total payment is 55 euros per share ($74.22), or about $810 million (600 million euros) including the dividend.

Kaufman & Broad designs and builds apartments, single family homes and some office properties.

The transaction is expected to close during KB Home's third fiscal quarter.

KB Home reported an 84 percent drop in first-quarter profit in March and warned higher foreclosures and tighter lending standards in the broader market could prolong weakness across the sector. But its French unit has held up and saw small increases in home sales in the first quarter.

(1 euro=$1.3494)