Schuler Homes sold
for $1.2 billion

The Honolulu-based homebuilder
is being acquired by the huge
D.R. Horton company

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By Russ Lynch
rlynch@starbulletin.com

Schuler Homes Inc. is being acquired by Texas home building giant D.R. Horton Inc. in a cash and stock deal valued at $1.2 billion that will make Schuler part of the second-biggest home builder in the country.

Honolulu-headquartered Schuler said its operations in Hawaii will be unchanged and founder James K. Schuler, 62, will get some key executive positions at Horton, including the presidency of Schuler Homes as a part of Horton. "Schuler Homes remains intact and will operate relatively independently," Schuler said.

"Schuler Homes remains Schuler Homes in Hawaii," he said. "My home is there. That's where my heart is."

The Hawaii company joined the top 15 home builders in the country in April when it completed its merger with Western Pacific Housing.

In the past 12 months Schuler, Western Pacific and Horton produced a total of 26,625 new homes and had total revenues of $6 billion.

The stock market reacted quickly to the today's news. Schuler's shares closed up $3.25, or 27.1 percent, on the Nasdaq at $15.25, with a hefty 2.6 million-share volume.

The companies announced the amount Schuler shareholders receive will depend on the price of Horton's shares in the weeks preceding the deal.

If Horton's stock averages $21.10, its closing price yesterday, the deal would be worth $4.09 cash and 0.57 Horton shares for each Schuler share, or a total value of $16.12, a 34 percent premium over Schuler's closing price yesterday of $12.

The deal would then be worth $653 million in cash and Horton shares; and Horton will assume about $552 million of Schuler Homes' outstanding debt, making the whole package worth $1.2 billion.

Schuler founded his business in Honolulu in 1988, quickly expanded to Maui, Kauai and the Big Island and took the company public with a stock issue in March 1992.

In 1996, the company expanded to the mainland and that expansion, plus the merger this year with Western Pacific, broadened the company's horizons to the point where Hawaii projects are only about 5 percent of its business.

Schuler employs about 60 in the islands and provides jobs for hundreds more through contractors.

The deal needs the approval of shareholders of both Schuler and New York Stock Exchange-listed Horton.

Shareholder approval appears likely since Schuler already committed 47 percent of its shares and Horton Chairman Donald R. Horton and his family committed 16 percent of the Horton shares to the deal.

The transaction should take about three months to complete, the companies said.