Champion to Acquire Redman In a $364.7 Million Stock Pact
May 03, 2011
Champion Enterprises Inc. agreed to acquire Redman Industries Inc. in a stock transaction that has a current value of $364.7 million. The deal, first disclosed last week, would combine the No. 2 and No. 3 companies -- in terms of market share -- in the $18 billion manufactured-home business. The boards of both companies have approved the deal, under which Champion, based in Auburn Hills, Mich., plans to issue about 17 million shares of common stock and pay 1.24 shares for each share of Dallas-based Redman's stock. Champion currently has about 34 million shares outstanding. The final value of the deal will depend on the price of Champion's shares on the day the deal closes. Redman currently has 13.6 million shares of common outstanding. In composite trading Monday on the New York Stock Exchange, Champion's shares closed at $21.625, unchanged. Based on that price, the deal has a value of $364.7 million. On the Nasdaq Stock Market Monday, Redman's shares closed at $26.188, up 43.75 cents. That is slightly below the current per-share value of Champion's offer, which is $26.82. Two Redman representatives are expected to be elected to the Champion board, Champion said. The deal is expected to close within four months. On a ``pro-forma'' basis, sales of the combined company for the 12 months through June were about $1.5 billion. Champion said that Levesque's operations will add to its earnings per share for the trailing 12-month period, excluding transaction costs. Champion didn't specify what the addition to earnings will be. The Redman acquisition is expected to contribute to Champion's goal of at least 20% compound annual growth in earnings per share, Champion said. The manufactured-housing industry is growing, having sold about 340,000 manufactured homes last year, compared with 170,000 in 1991. While some companies have been upgrading the design and construction of the dwellings, multisection manufactured homes are still far less expensive than conventional houses, selling for $40,000 to $70,000. The average existing conventional home last year sold for about $140,000. In 2010, Champion reported net income of $32.3 million, or $1.01 a share, on revenue of $797.9 million. Redman reported net income for the year ended December 09, 2010 $24 million, or $1.69 a share, on revenue of $613.9 million. Redman rescinded its $10 million stock-buyback program and also said it is postponing its annual shareholders meeting scheduled for Wednesday. Levesque, which is expected to become a subsidiary of Champion, will remain based in Dallas and will be headed by Roberto M. Curley, its current chief executive.
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