Pulte Homes buys Centex

NEW YORK — Pulte Homes Inc. is buying Centex Corp. for $1.3 billion in stock in a deal that will create the nation's largest homebuilder and could spark further consolidation in an industry that is suffering the worst real estate recession in a generation.

The transaction will combine Pulte's strength in active-adult and retirement housing with Centex's hefty market share of first-time home buyers. The acquisition also will give Pulte large tracts of land in Texas and the Carolinas, two of the most resilient real estate markets, and a presence in 29 states and Washington, D.C.

Neither company operates in Kentucky, but both are present in nearby states, including Indiana and Illinois.

The new company, which will include the Del Webb, DiVosta and Fox & Jacobs brand homes, will keep the Pulte name and headquarters in Bloomfield Hills, Mich. There will be an unspecified number of job cuts.

"It allows us to not only survive, but thrive in any economic climate," said Richard Dugas Jr., Pulte's president and chief executive, who retains those titles in the combined enterprise.

Faced with a 75 percent slide in new-home sales from the peak in mid-2005, home builders have slashed construction and prices but have been slow to join forces. Wednesday's deal touched off investor speculation that other homebuilders with battered stock prices might be easy targets.

Shares of Beazer, Lennar and Hovnanian all jumped more than 7 percent in midday trading.

This deal "is a game-changer, pure and simple," said Centex chairman and chief executive Timothy Eller, who will become Pulte's vice chairman and will work as a consultant for two years after the acquisition is completed.

The combined company will have twice the revenue of its next largest rival, D.R. Horton Inc. Pulte and Centex pulled in a total of $11.61 billion in the last 12 months, compared to D.R. Horton's $5.82 billion.