Winn Enterprises has scaled back a previously announced acquisition and now says it intends to buy only 50%, rather than 100%, of a large East Coast real estate developer. Under the revised acquisition agreement, Winn would operate the company as a joint venture with current owners of the company.
Winn officials said the deal was restructured to retain the current management of the privately owned company. Winn declined to disclose the name of the company until the deal closes. The soon-to-be-acquired company builds federally financed housing projects, mostly in rural areas.
Terms of the new deal call for Winn's MountainWest Savings and Loan subsidiary to acquire a 50% interest for about $30 million in cash and notes and 1 million newly issued Winn shares. Winn stock has been trading for about $4.50 a share in recent weeks.
But the revised agreement also calls for distribution of some of the company's assets to its principal shareholders, who are also the development firm's current managers.
When Winn, a specialty foods and financial services company based in Fullerton, first announced the deal in January, it said it would buy the company for about $122 million in cash and notes and 1 million shares of new Winn stock valued at more than $3 million.
"We wanted to keep the management team involved, so we structured this as a joint venture," said R. Sam Christensen, vice president of corporate development. Christensen said in a telephone interview that the new arrangement gives the real estate company's management an incentive to remain and continue to be successful. He described the company as one of the nation's largest developers of federally financed housing.
Christensen said Winn, which owns Knudsen Corp., California's largest dairy-products firm, is not changing its strategy to get back into the real estate business. In recent years, Winn has sold many of its real estate holdings, including the Buena Park Hotel in 1983.
"This is not a change of strategy, it is an expansion of our savings and loan," Christensen said.
He said the real estate company will be operated through a subsidiary of MountainWest, which is based in Ogden, Utah.
The real estate company builds projects financed by the federal Department of Housing and Urban Development. It has built more than 100 rural housing projects, most of them apartments, according to Winn officials.