Taylor Wimpey Sells North American Units for $955 Million to Buy U.K. Land

Taylor Wimpey Plc (TW/), the U.K.’s second-largest homebuilder, agreed to sell its North American units for at least $955 million to cut debt and purchase land.

The buyer of the U.S. and Canadian divisions was TMM Holdings LP, a property investment firm backed by Oaktree Capital Management LP, TPG Capital and JH Investments Inc., Taylor Wimpey said in a statement today. The price was at the top end of the High Wycombe, England-based company’s estimates, Chief Executive Officer Peter Redfern said.

Taylor Wimpey reported three years of losses through 2009 as the collapse of the U.K. housing market led to falling sales and writedowns. The company sold shares and renegotiated loans after borrowings soared to 1.7 billion pounds ($2.7 billion) by July 2008, bringing it close to violating loan agreements.

“The sale is the final stage of getting the balance sheet in the right shape and puts us in a strong position for the next five years,” Redfern said on a conference call. “We can participate more fully in the U.K. land-buying market.”

Taylor Wimpey rose 3 percent to 42.6 pence at 10:54 a.m. in London trading, increasing the company’s market value to 1.36 billion pounds. The stock, which has climbed 35 percent this year, reached a low of 3.34 pence on Nov. 25, 2008.

Photographer: Suzanne Plunkett/Bloomberg

The price was at the top end of the High Wycombe, England-based company’s estimates, Chief Executive Officer Peter Redfern said. Close

The price was at the top end of the High Wycombe, England-based company’s estimates,... Read More

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Photographer: Suzanne Plunkett/Bloomberg

The price was at the top end of the High Wycombe, England-based company’s estimates, Chief Executive Officer Peter Redfern said.

“The price was not as low as feared, but Taylor Wimpey is now just one of seven U.K. housebuilders with a balance sheet that’s not especially strong,” said Charlie Campbell, an analyst at Liberum Capital Ltd. with a “hold” rating on the stock. “If you want a pure U.K. housebuilder with a bit of debt, why not buy Persimmon, which has a much better landbank.”

California, Florida

Taylor Wimpey’s U.S. unit has operations in Arizona, California, Colorado, Florida and Texas. Its Canadian business operates under the name Monarch Homes.

Proceeds from the deal will help Taylor Wimpey invest in its U.K. homebuilding business, especially the land market, the company said. The homebuilder will retire 350 million pounds of a 950 million-pound revolving credit facility.

The transaction is subject to approval by shareholders and is expected to be completed by the end of May, according to the statement.

Taylor Wimpey was formed by the 5 billion-pound merger of Taylor Woodrow and George Wimpey in 2007. When the combined company started trading on July 3 of that year, it had a stock price of 379.5 pence and a market value of 4.35 billion pounds.

Like other U.K. homebuilders, Taylor Wimpey has been trying to widen margins by acquiring cheap land and selling fewer homes with higher margins on each sale. U.K. house prices fell for a ninth month in March as growth in the supply of homes for sale outpaced demand, Hometrack Ltd. said today. Barratt Developments Plc. is the country’s biggest homebuilder by volume.

North America Share

Taylor Wimpey reported net income of 259 million pounds for last year. North America accounted for 32 percent of its revenue in 2009, according to data compiled by Bloomberg.

The operating profit margin in North America was 11.2 percent in 2010, compared with 7.1 percent in the U.K., the company said in March. Taylor Wimpey in January reported net debt of about 660 million pounds, beating an average estimate of 716 million pounds by 11 analysts surveyed by Bloomberg.

Oaktree, based in Los Angeles, manages $82 billion in assets including $4 billion of real estate assets and $55 billion of distressed and high-yield debt, according to its website. TPG Capital of Texas has $48 billion of capital under management, its website says. Vancouver-based JH Investments has holdings in real estate, construction services and aircraft supply.

To contact the reporter on this story: Tom Bill in London at tbill2@bloomberg.net.

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net.

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