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On Wednesday, investors were intriqued to learn that a big merger could be at hand in the housing sector.
Pulte [PHM
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] said it was in talks to buy Centex [CTX
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] for $1.3 billion in stock. The transaction includes $1.8 billion of debt. It will combine Pulte's strength in active-adult and retirement housing with Centex's hefty market share of first-time homebuyers.
And this may be just the beginning. Pulte CEO Richard Dugas expects further mergers in the industry.
With consolidation coming into the housing sector, and February’s modest upturn in sales, investors are wondering if the worst is over?
John Silvia, chief economist at Wachovia is bullish. He told Bloomberg that the Pulte-Centex merger was “classic early recovery kind of behavior.”
“What we’re seeing is a bottoming in the home construction business -- not necessarily prices, but construction business,” Silvia said. “The outlook has changed here from one of ‘We don’t know how bad this is going to be’ to one of ‘OK, it looks like we’ve seen the worst and maybe things are bottoming out.’”
Of course it’s important to note that many people remain bearish on the homebuilders. Deutsche Bank analyst Nishu Sood tells the Fast Money desk he’s cautious. “I’m seeing signs that the rate of decline is slowing. However I thinks the decline continues.”
Real Estate analyst Ivy Zelman concurs. She told Bloomberg, “We don’t like to be bearish but we don’t see a bottom in 2009.”
What do you think? We want to know
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Trader disclosure: On Apr 8th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (WFC), (AAPL), (WMT), (SDS), (GS), (GE) ; Seymour Owns (AAPL), (BAC), (BX), (EEM), (FCX), (FXI), (RIO) ; Karabell Owns (AAPL), (CSCO), (FCX), (FXI), (GOOG), (GLD), (JPM), (NOK); Najarian Owns (APPL), (BAC), (C), (TCK), (NTAP), (CPN); Najarian Owns (AXP) Calls, (BIIB) Calls, (HUM) Calls, (JPM) Calls, Najarian Owns (V) Calls
For Sood
Deutsche Bank Owns (CTX)|
(CTX) Is An Investment Banking Client of Deutsche Bank
Deutsche Bank Owns (DHI)
Deutsche Bank Has Received Compensation From (DHI)
Deutsche Bank Owns (LEN)
(LEN) Is An Investment Banking Client of Deutsche Bank
Deutsche Bank Has Received Compensation From (LEN)
Deutsche Bank Owns (KBH)
(KBH) Is An Investment Banking Client of Deutsche Bank
Data is a real-time snapshot *Data is delayed at least 15 minutes