(Reuters) - Standard Pacific Corp SPF.N and Ryland Group Inc RYL.N said they would merge to become the fourth-largest homebuilder in the United States.
The merged company would have a market capitalization of about $5.2 billion and an enterprise value of about $8.2 billion and would own or control about 74,000 homesites, the companies said in a statement on Sunday.
Standard Pacific will effect a 1-for-5 reverse stock split, after which Ryland shareholders will receive 1.0191 shares of Standard Pacific common stock for each share of Ryland common stock. Fractional shares will be paid out in cash, the companies said.
Upon closing of the deal, Standard Pacific stockholders will own about 59 percent and Ryland shareholders will own the remaining 41 percent of the combined company.
Ryland Chief Executive Larry Nicholson will become President and CEO of the combined company that would be the largest U.S. homebuilder after D.R. Horton Inc (DHI.N), Lennar Corp (LEN.N) and PulteGroup Inc (PHM.N).
The merger, unanimously approved by the boards of both companies, could result in annual savings of between $50 million and $70 million, the companies said.
J.P. Morgan Securities LLC served as exclusive financial advisor to Standard Pacific, while Ryland was advised by Lazard.
Shares of Standard Pacific and Ryland Group closed at $8.36 and $42.79, respectively on Friday on the New York Stock Exchange.
Reporting by Subrat Patnaik in Bengaluru; Editing by Anupama Dwivedi