Pulte pays full value for Centex; IPC up on Validus hostile offer; Charlotte Russe bids due in April

By Cristal Cody

Tupelo, Miss., April 9 - Market sources said Thursday that a competing bid for Centex Corp. is unlikely with Pulte Homes, Inc.'s bid reaching the full value of the homebuilder.

In other deals, Validus Holdings, Ltd. went hostile with its $1.68 billion stock offer and sent IPC Holdings, Ltd.'s shares up, but observers expect the company to fight for its deal with Max Capital Group Ltd.

Also on Thursday, retailer Charlotte Russe Holding, Inc. said the first bids for the company are due this month.

Meanwhile on Wall Street, investors wanted a good Thursday ahead of the market's closure for Good Friday and sent stocks soaring.

The Dow Jones Industrial Average gained 246.27 points, or 3.14%, to close at 8,083.38.

The broader indexes saw bigger gains.

The Standard & Poor's 500 index added 31.40 points, or 3.81%, to close at 856.56, and the Nasdaq Composite index jumped 61.88 points, or 3.89%, to 1,652.54.

Counter bids unlikely

Pulte and Centex said on Wednesday the two homebuilders will combine in a $3.1 billion stock deal.

Under the terms, Centex shareholders will receive 0.975 of a share of Pulte for each share of Centex. The deal is valued at $10.50 per Centex share and represents a 38% premium to Dallas-based Centex' closing price of $7.62 on Tuesday.

"We believe that Pulte is paying a full price for Centex, given that Centex is likely to book further impairments on its land assets," an analyst said Thursday.

The combined company will own more than 50,000 finished lots.

A small chance exists for a competing offer for Bloomfield Hills, Mich.-based Pulte from competing homebuilders, with the most likely bidders including Toll Brothers, Inc., NVR Inc. and D.R. Horton, Inc., the analyst said.

"However, given that there are other potential bid targets with liquidity issues, a bid for smaller targets at favorable valuations seems more likely," the analyst said.

The source expects the transaction to close by late August.

Another analyst said Thursday that the deal does not necessarily mean a jumpstart to industry consolidation.

"Historically, builders have merged to gain either land positions or management talent, none of which are in short supply today," the analyst said.

Also, "with one of the more likely strategic suitors having been removed from the equation, we believe terms for future transactions may prove less generous or sellers may be forced to explore outside the industry for partners."

Centex shares closed up 42 cents, or 4.64%, at $9.48 on Thursday.

Pulte's stock regained from Wednesday's 10.49% fall to close at $10.11, up 47 cents, or 4.88%, on Thursday.

Fort Worth-based D.R. Horton shares rose 85 cents, or 8.68%, to close at $10.64.

Shares of Horsham, Pa.-based Toll Brothers added 86 cents, or 4.94%, to end trading at $18.28.

Reston, Va.-based NVR shares jumped $32.42, or 7.50%, to close at $464.50.

Validus pushes

Earlier this week, IPC Holdings said Validus' offer is not superior to its own planned acquisition of Max Capital and asked shareholders to support the Max deal.

"What they really want is mainly a compatibility of companies, and IPC and Max have complimentary businesses," an analyst told Prospect News. "Validus is somewhat more diversified than IPC, but they have a lot of similar businesses."

IPC announced on March 2 it planned to acquire Max Capital, a specialty insurer and re-insurer, in an all-stock deal valued at about $912 million.

The Bermuda-based companies intend to provide global specialty insurance and reinsurance services.

Validus, a Bermuda reinsurance and insurance provider, offered on March 31 to exchange one IPC share for every 1.2037 Validus shares in a deal that values IPC at $29.98 a share.

In a statement, Ed Noonan, Validus' chairman and chief executive officer, said the company expects to push its proposal and will "use all available means to complete our transaction."

IPC shares gained $1.20, or 4.54%, to close at $27.65 on Thursday.

Max Capital's stock added $1.02, or 6.09%, to finish at $17.76.

Shares of Validus rose 27 cents, or 1.16%, to close Thursday at $23.50.

Charlotte Russe progresses

San Diego-based Charlotte Russe said in a presentation made Thursday to RiskMetrics Group, Inc. that it has been encouraged by interest shown from potential bidders for the company.

New York-based RiskMetrics provides institutional shareholder and corporate governance products and services.

Charlotte Russe said the first bids are due this month and it plans to ask a "limited number of finalists to refine indications of interest for further evaluation by [the] board," according to the presentation, which was included on Thursday in an 8-K regulatory filing with the Securities and Exchange Commission.

The women's clothing retailer is fighting a move by Allan Karp to elect three nominees to the board at the company's annual shareholders meeting on April 28.

Last year, Karp's firm, KarpReilly Capital Partners, LP, and H.I.G. Capital, LLC made an offer to buy Charlotte Russe for $9.00 to $9.50 a share, but the board rejected the bid.

Shares of Charlotte Russe jumped $1.24, or 13.54%, to close at $10.40 on Thursday after the retailer forecast a second-quarter profit of 2 cents to 5 cents a share.

Mentioned in this article:

Centex Corp. NYSE: CTX

Charlotte Russe Holding, Inc. Nasdaq: CHIC

D.R. Horton, Inc. NYSE: DHI

IPC Holdings, Ltd. Nasdaq: IPCR

Max Capital Group Ltd. Nasdaq: MXGL

NVR Inc. NYSE: NVR

Pulte Homes, Inc. NYSE: PHM

Toll Brothers, Inc. NYSE: TOL

Validus Holdings, Ltd. NYSE: VR

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