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Lewis Homes Mulls Merger, Sale Options

Construction: Upland builder also considering IPO. Industry has been undergoing consolidation.


Lewis Homes, one of Southern California's largest home builders, is exploring the possible sale or merger of the family-owned company.

The Upland-based home builder informed its employees and subcontractors late last week that it was going to "look at some strategic options," said Randall Lewis, executive vice president of marketing. One of the options includes an initial public stock offering, he said.

Lewis, whose family has controlled the firm for about 40 years, said he expects the company to spend six months looking at its alternatives and talking to potential buyers and merger partners. "I'm sure we will talk to most of the big builders," Lewis said.

The promising outlook for home building in Southern California and a string of acquisitions by the industry's major builders--including Los Angeles-based Kaufman & Broad Home Corp. and Lennar Corp. of Miami--prompted Lewis Homes to consider a potential sale among other plans.

"There is just a lot of churning going on out in the industry," said Lewis. "Now is a good time to evaluate . . . where we are going." Lewis Homes--which expects to build about 3,000 homes in California and Nevada this year-- generates about $600 million a year in revenue from home building.

Lewis said the company's commercial holdings--which include shopping centers and apartment complexes--would not be part of any sale or merger.

In recent months, many Southern California home builders have teamed with or been acquired by larger companies as part of an industrywide consolidation. Lennar this week completed its $85-million acquisition of Irvine-based Polygon Communities Inc.

Earlier this year, Irvine-based John Laing Homes merged with Watt Residential Partners of Encino, creating a company that plans to build 2,000 homes a year.

Meanwhile, Kaufman & Broad has been scooping up builders throughout the West. In one recent month, it bought three small, regional companies for more than $150 million.

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