Schuler Homes
shareholders vote today
on merger with Horton

The merger will make D.R. Horton
the No. 2 U.S. home builder

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By Dave Segal
dsegal@starbulletin.com

Schuler Homes Inc., which grew from a small Hawaii company in 1988 to become one of the top 15 home builders in the country, was expected to begin a new chapter today when its shareholders voted on D.R. Horton Inc.'s $1.6 billion offer for the company.

The vote was scheduled for 7 a.m. Hawaii time at Honolulu-based Schuler Homes' El Segundo, Calif., office. Sharehol- ders of Horton, which is based in Arlington, Texas, were voting at the same time. Results weren't available by press time.

If approved, the combination of the two companies would form the second-largest home builder behind Bloomfield Hills, Mich.-based Pulte Homes Inc.

Horton, the fourth-largest home builder in the United States with operations in 20 states, is paying about $900 million in cash and stock and assuming about $700 million in debt for Schuler Homes, which has about 41 million shares outstanding. The Hawaii home builder, whose Hawaii homes represent only about 7 percent of its total sales, also has operations in California, Oregon, Washington, Colorado and Arizona.

Schuler Homes' stock is up 84.3 percent since the merger was announced Oct. 23.

At the time, Horton had offered to acquire Schuler Homes at a 34 percent premium. Schuler Homes' stock rose 22 cents to $22.12 today on the Nasdaq. It was due to be delisted after the close of the market today. Schuler Homes shareholders can opt for a combination of cash and Horton stock, all cash, or all stock.

Horton's shares, which fell 71 cents to $20.39 on the day of the merger announcement, have since rebounded. Its stock gained 70 cents to $37 today on the New York Stock Exchange. Horton's stock is up 81.5 percent since the initial selloff.

Jim Schuler, president, chief executive and co-chairman of the company that bears his name, will become president of the Schuler Homes division of Horton, a senior vice president of Horton and a member of the Horton board of directors upon completion of the deal.

"I really wasn't looking for this (acquisition)," Schuler said in late December. "But I knew this probably would happen and we would be an acquisition target once we did the Western Pacific deal (last April that doubled Schuler Homes' size). We were a $1.3 or $1.4 billion dollar company (in terms of revenues) and Horton is about a $4.5 billion company. Combined, that makes us a $6 billion company.

"I knew at some time that somebody would make a move to acquire us because of our size.

"Horton is an excellent company. I know the management. I like the people. I like the philosophy. It's an ideal transaction."