French private equity group PAI partners has entered into exclusive talks to take a 50.01 percent stake in Paris-listed house-builder Kaufman et Broad.
PAI is buying the shares from US parent company KB Home and the group’s chairman Guy Nafilyan. The offer price of €55 per share gives the firm a market capitalisation of around €1.3 billion ($1.8 billion).
If PAI’s bid succeeds, sources close to the deal said the buyout firm would make an offer to minority shareholders as soon as possible after acquiring the majority stake.
Kaufman et Broad had first quarter profits of €15.8 million, up 11 percent from €11.1 million last year, accompanied by a 10.1 percent rise in sales to €285.3 million from €259.1 million.
KB Home said last week it was considering a €53.13 per share offer to purchase its 10,921,954 shares, which represent a 49 percent stake in its affiliate.
At 1215 CET, Kaufman et Broad shares were down 3.07 percent to €58.64.
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, 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 agreeing 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.