Toll Brothers Agrees To Buy Home Building Business Of Shapell For $1.60 Bln

(RTTNews) - Luxury homes builder Toll Brothers, Inc., (TOL) late Wednesday said it has entered into a definitive purchase agreement with Shapell Industries, Inc., a private California builder, for Toll to acquire the home building business of Shapell in a stock acquisition for about $1.60 billion in cash.

Shapell's land portfolio, which Toll Brothers is acquiring, consists of 5,200 home sites, 97.5 percent of which are entitled, in established communities. This land was assembled over many decades in many of the state's most affluent and high-growth markets: the San Francisco Bay area, metro Los Angeles, Orange County and the Carlsbad market.

Through August 31 of calendar year 2013, Shapell delivered 347 homes at an average price of $791,000.

Toll Brothers intends to finance the deal with a combination of draws from its existing $1.035 billion credit facility as well as debt and equity financing. In addition, it has received a supplemental commitment for a $500 million, 364-day senior unsecured revolving credit facility. Post-closing, Toll Brothers plans to selectively sell land of $500 million.

The transaction is expected to close in the first calendar quarter of fiscal year 2014. Separately, the Shapell family will retain ownership of its retail, commercial and multi-family businesses through other entities.