GO
Loading...

The New Urge To Merge, Pt 2

As further proof of what I wrote about yesterday in the NEW URGE TO MERGE, today Pulte Homes and Centex agreed to merge.

Of the $189.3 billion in first quarter deals, corporate buyers dominated and the private equity world was responsible for just $4.3 billion, according to S&P/Capital IQ. Private equity is hampered by prior deals that they cannot unwind and a drought in deal financing.

After a sharp drop in deal activity as the economy choked in the fourth quarter, there's now a slight pickup in the urge to merge among companies looking to grow their businesses strategically. They are driven in part by relatively cheap stock prices and slow growth in their own businesses.

Some of these corporate combinations are marriages of convenience and are in businesses that have been particularly stressed by the economy.

Few industries have been harder hit than the battered homebuilders.

Today, Pulte Homes and Centex agreed to merge to create the largest U.S. homebuilder in a $1.3 billion stock deal. The transaction also includes $1.8 billion in debt. The deal is also likely to spur mergers among others in the industry.

Questions? Comments? marketinsider@cnbc.com

  • Patti Domm

    Patti Domm is CNBC Executive Editor, News, responsible for news coverage of the markets and economy.

  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

  • CNBC's Senior Personal Finance Correspondent

  • JeeYeon Park is a writer for CNBC.com. Follow her on Twitter: @JeeYeonParkCNBC

  • Rick Santelli joined CNBC Business News as an on-air editor in 1999, reporting live from the floor of the Chicago Board of Trade.

  • Senior Producer at CNBC's Breaking News Desk.