News Summary
Irvine-based New Home Co. is set to acquire Landsea Homes Corp. in a merger valued at $1.2 billion. Subject to approvals, this merger will enhance operations across several states and project annual sales of approximately 4,000 homes. New Home will pay Landsea shareholders $11.30 per share. As part of the deal, Apollo Funds will invest $650 million into the merged entity, aiming to accelerate growth amidst a fluctuating homebuilding market.
Irvine, CA – In a significant move within the homebuilding industry, Irvine-based New Home Co. and Dallas-based Landsea Homes Corp. have announced a merger plan valued at $1.2 billion. The announcement was made on May 12, with the intent for New Home to acquire the publicly owned Landsea. This merger is subject to regulatory and shareholder approvals, with expectations to finalize before the end of the year.
The planned merger will bring together operations across multiple states, including California, Arizona, Colorado, Florida, Oregon, Texas, and Washington. The combined companies are projected to deliver an annual sale of approximately 4,000 homes. Additionally, New Home will pay Landsea stockholders $11.30 per share, amounting to around $400 million in cash.
As part of this transaction, Apollo Funds, which acquired control of New Home in 2021, will invest $650 million into the merged entity. An Apollo partner expressed that this investment would help both companies accelerate their growth trajectories significantly.
Merger Details and Background
New Home Co., founded in 2009, emerged to assist the Irvine Co. with homebuilding efforts following the Great Recession. Landsea Homes Corp. was established in 2013 as the U.S. arm of the Chinese builder Landsea Group, recognized for its IronRidge development in Lake Forest. Earlier this year, Landsea moved its headquarters from Newport Beach, California, to Texas.
Despite the promising merger, both companies have faced challenges within a fluctuating homebuilding market, impacted by rising mortgage rates and an increasing need for builder incentives to attract potential buyers. In the first quarter of 2025, Landsea delivered 643 homes, a remarkable 27% increase from the previous year. However, the company also reported a net loss of $7 million.
Housing Market Trends
The Orange County homebuilding market particularly felt the effects of a downturn in 2024. Sales among the top 13 builders dropped by 23%, with only 2,253 homes sold compared to 2,912 in 2023. Furthermore, single-family home sales fell by 31%, while attached home sales declined by 15%. Many builders, including Tri Pointe Homes and Taylor Morrison, reported significant reductions in home sales during this period.
In light of these market difficulties, several builders still experienced growth, such as California Pacific Homes and The Olson Co., initiating a need for more developable land in the region to meet ongoing demand.
Future Outlook
As the merger creates a larger entity under the leadership of New Home CEO Matthew Zaist, there is an emphasis on the combined vision and goals to scale operations nationwide. Landsea CEO John Ho highlighted that the merger would provide immediate cash value for shareholders and amplify stakeholder opportunities for growth.
While the merger signals optimism for the companies involved, the ongoing challenges and fluctuations in the homebuilding market present a complex landscape that the newly formed entity will need to navigate. The proposed timeline for the merger completion before year-end hopes to usher in a new phase for both companies amid a shifting real estate environment.
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Additional Resources
- Orange County Register
- Orange County Business Journal
- The Real Deal
- Los Angeles Times
- FOX 11 Los Angeles
- Wikipedia: Homebuilding
- Google Search: homebuilding market
- Google Scholar: homebuilders mergers
- Encyclopedia Britannica: Homebuilding
- Google News: Orange County homebuilders
