PAI buys French house-builder at cut-price rate

PAI Partners has bought a controlling stake in partially listed house-builder Kaufman et Broad from US housing group KB Home for more than €5-a-share below Kaufman’s market price last week.

French buyout group PAI Partners is paying €55 a share for KB Home’s entire 50.01 percent stake in Kaufman et Broad, giving the company a market capitalisation of just under €1.3 billion ($1.8 billion).

Kaufman et Broad: the French house-builder bought by PAI.

The firm is also buying some of the chairman and chief executive officer Guy Nafilyan’s shares.

The shares of Kaufman et Broad are also listed on Euronext and were trading down €0.56 at €57.46 at 10.57 CET. The shares have dropped by nearly 5 percent in the last week since PAI’s bid was brought to the market’s attention, although the share price still remains €2.46 above what PAI has paid for its controlling stake.

A statement from PAI said it intends to make an offer for the remaining shares at the €55 a share price promptly after acquiring the controlling stake.

A PAI spokesman said it would support the existing management and its plans to expand the business including through acquisitions.

The deal is subject to anti-trust clearance and to a €4.83 per share dividend which will be deducted from the €55 price per share.

The European house-building sector is proving popular with private equity. Swedish firm Industri Kapital recently sold Prevesta for SKr 1.9 billion (€204 million, $276 million) generating a return of nearly ten times its initial investment. West Coast Capital, Tom Hunter’s investment vehicle, won out over a Permira-led consortium to buy UK group McCarthy & Stone last year for £1.1 billion (€1.62 billion, $2.2 billion), and went on to acquire Crest Nicholson for £715 million in March.

There has also been consolidation in the industry more generally. Wimpey and Taylor Woodrow have agreed a £2.5 billion merger to create the biggest house-building group in the UK, while Eiffage, France’s third-biggest construction company, is currently fending off a €6.6 billion hostile takeover bid from Spanish rival Sacyr Vallehermoso