For more than two decades, Stuart Miller has been the CEO of Lennar, one of the largest homebuilders in the nation. Miller had been with the company through good times and bad, and he was there when the country went through the housing collapse that followed 2007, arguably one of the worst that the nation has ever faced. He has faced down those who tried to defraud the company and was able to increase the revenue of Lennar to nearly $12 billion.
A New Acquisition
In 2017, Miller was looking for more ways that he could help to grow his company. Even though the need for more homes was evident, and it still is, there were some issues. For one, there were labor shortages, which was making it more difficult to get the workers that they needed in order to build their homes. In addition, the price of supplies and materials was rising. Solving those problems was not going to be easy, but Miller had an idea.
He believed that by bringing in another big homebuilder and acquiring them, it could help to increase the number of employees and subcontractors, allow them to have more land, and ultimately, provide the company with more negotiating power. While this proved to be a good option, it was one that did not immediately present any contenders. The companies that were large enough for Lennar and Miller to want to acquire tended to be owned by people who did not want to give up control of their company. Other companies were too small and would not provide the results that they wanted.
However, they did eventually find the CalAtlantic Group, which is based out of Virginia. At the time they considered acquiring the company, CalAtlantic was the fourth largest homebuilder in the United States. They were created when Ryland Homes and Pacific Homes merged in 2015, and Lennar thought that they would be a perfect choice for the acquisition. Lennar did not jump the gun too early though. They studied the company for about six months and finally came to a deal in October of 2017.
They bought the company for $9.3 billion, and they took on the debt from CalAtlantic, which was $3.6 billion. However, this was still a good deal for them. It made them the largest homebuilder in the country, moving D.R. Horton into second place. In addition, they believe that they are going to be able to save about $50 million in construction costs in 2018.
A New Path for Miller
This was one of the last large moves by Miller as the CEO. In April of 2018, he announced that he was going to be moving into the role of executive chairman. The new CEO would be Rick Beckwitt. This would mark the first time in nearly have a century that a Millar was not in the CEO spot at the company.
It will be interesting to watch and see what happens over the course of the rest of 2018 and the years that follow with the new largest homebuilder in the country.