Jacksonville-based Dream Finders Homes Inc. announced May 11 an unsolicited $704 million offer to buy Atlanta-based Beazer Homes USA Inc.
Dream Finders said it has tried to engage with Beazer to negotiate a deal but has been unsuccessful.
“While we would have preferred to reach an agreement privately, we are making our interest public for the benefit of all Beazer shareholders,” Dream Finders CEO Patrick Zalupski said in a news release.
“We urge Beazer’s shareholders to encourage the Board to engage constructively and meaningfully with Dream Finders to pursue this highly compelling all-cash proposal,” he said.
Beazer did not immediately issue a response to Dream Finders’ announcement.
Dream Finders said it is offering to pay $27.75 for each Beazer share, a premium of about 40% to Beazer’s closing price May 5.
Zalupski sent a letter to Beazer CEO Allan Merrill on that date with the proposal.
Beazer builds homes in 13 states in the West, East and Southeast.
In a February letter to Merrill, Zalupski said a merger of the companies would give Dream Finders operations in 21 of the top 50 metropolitan areas in the U.S. and pair Beazer’s strength in the West with Dream Finders’ presence in the East, Southeast and Texas.
Dream Finders reported revenue of $887.8 million in the quarter ending March 31, while Beazer had revenue of $409.8 million.
“Combining our two companies, with our highly complementary footprints and product strategies, would create the seventh-largest U.S. homebuilder,” Zalupski said in the release.
He said Dream Finders is one of the 10 largest shareholders of Beazer, but there are no Securities and Exchange Commission filings indicating Dream Finders’ stake in the company.
Beazer has reported two consecutive quarterly losses, and its stock has been falling, Zalupski said.
“As a top 10 shareholder, we are concerned that if Beazer continues to operate on a standalone basis, the company will further erode shareholder value by executing a suboptimal operating and capital allocation strategy, an inefficient cost structure due to limited scale, and incurring excessive build costs, driven by an unsuccessful product strategy,” he said.
“We believe this transaction is a natural next step in our growth trajectory. We have successfully completed eight acquisitions since our initial public offering in 2021, deploying over $1 billion, and we have demonstrated our ability to execute land-light mergers and acquisitions, generate positive operating cash flows post-acquisition, and effectively integrate homebuilding operations, further enhancing our revenues and diversifying our geographical footprint,” Zalupski said.