May. 12 at 10:21 AM
$BZH $24.18
Holding long position
UPDATE ON T/O: Beazer Homes announces rejection of unsolicited proposals from Dream Finders Homes
Beazer Homes USA, Inc. (BZH) today confirmed that its Board of Directors, with the assistance of its financial and legal advisors, has evaluated and rejected multiple unsolicited, non-binding proposals from Dream Finders Homes, Inc. (DFH) to acquire all of the outstanding shares of Beazer. In evaluating the proposals, the Beazer Board determined that they significantly undervalued the Company, were not in the best interests of Beazer shareholders and did not establish an appropriate basis for discussions.
note: In rejecting each of Dream Finders’ proposals, the Beazer Board considered, among others, the following factors:
The proposals represent a significant discount to book value per share, which has only grown since the initial February 5 proposal. The Beazer Board believes shareholders should be appropriately compensated for the value of the Company’s assets, especially its land assets, which Beazer’s Board is confident could not be replaced for what the Company paid for them. The proposals represent a significant and unwarranted discount to Beazer’s inherent value, and neither recent nor historical industry transactions support such a valuation.
Notably, the reduced per share price in the May 5 proposal was proposed despite the fundamental strengths of Beazer being unchanged and the book value per share of the Company’s assets increasing since Dream Finders made its first two proposals. Specifically, Beazer’s most recently reported book value was
$41.83 per share, while the May 5 proposal offers to purchase the Company for only
$25.75 per share. This 38% discount represents approximately
$450 million of total value.
Executing the Company’s Multi-Year Goals is the best path for maximizing shareholder value. Beazer has repeatedly articulated to investors and all stakeholders its three Multi-Year Goals, which are focused on growing community count, de-leveraging the balance sheet and growing book value per share. The Company’s management team continues to nimbly execute and work towards these goals. As management noted on its recent earnings call, the Company’s sales pace improved in Q2, it believes near-term gross margin expansion catalysts are in place, average sales prices are trending higher and community count is growing. Accordingly, Beazer’s Board is confident that the execution of the Company’s strategic plan will yield substantially more value for Beazer shareholders than pursuing the transaction proposed by Dream Finders.
Beazer’s capital allocation strategy and strong liquidity position provide it with ample financial flexibility, not only to fund its operating, financial and strategic objectives, but also to return significant capital to shareholders. With strong support from its lending partners, the Company recently increased its senior unsecured revolving credit facility by
$160 million to
$525 million. In addition, the maturity date of the credit facility was extended by two years to March 2030, further strengthening the Company’s balance sheet and demonstrating its lenders’ confidence in the Company’s strategic plan
