Real estate developer William Lyon, moving to reclaim his position as one of Southern California's largest home builders, agreed to acquire a dominant interest in Presley Cos., the firm announced Thursday.
Lyon plans to combine Presley with his William Lyon Homes Inc. Though only a fraction of the size of his former empire, the combined companies would rank as the sixth-largest home builder in Southern California, with annual revenue of about $270 million, according to a recent survey.
Lyon, who is chairman of both of the Newport Beach-based companies, ranked among the region's largest independent builders only a decade ago but was battered during the recession.
Under terms of the complex deal, which took more than 15 months to work out, Presley would buy Lyon's privately held firm for $48 million and assume several million dollars in debt.
In turn, Lyon and his son, William, have offered to acquire 10.6 million shares of Presley stock for 65 cents a share, or $6.9 million. The purchase would increase Lyon's stake in Presley from 22% to about 49%.
The offer price, however, is below Presley's current market price. Shares of the firm closed unchanged at 81 cents on the New York Stock Exchange. They have been as high as $1.13 and as low as 38 cents over the last year.
The offer, which requires shareholder and regulatory approval, caps lengthy negotiations by Presley and Lyon, who initially offered to buy the entire company for $18 million in cash in 1998.
That bid, for 40 cents a share, also was far lower than Presley's stock price at the time. It was rejected by the company's board.
Presley and Lyon executives did not return phone calls.
The combined operation, which would retain the Presley name, would allow Lyon Homes to spread beyond its Orange County core into San Diego County and the Inland Empire, where Presley is one of the largest builders.
The deal comes at a time when a consolidation trend is sweeping Southern California's home-building industry, wiping out a number of independent builders.
But analysts said Lyon's combined forces would have greater resources to compete in a market that has increasingly become driven by large, publicly traded builders.
In Southern California last year, Presley ranked eighth with 899 home sales, and Lyon ranked 33rd with 229.