NEWPORT BEACH, CA & BELLEVUE, WA -- William Lyon Homes, one of the largest Western U.S. regional homebuilders, and Polygon Northwest Company L.L.C., the largest private homebuilder in the Pacific Northwest, announced that they have entered into a definitive purchase agreement pursuant to which William Lyon Homes will acquire the residential homebuilding business of Polygon Northwest for a cash purchase price of approximately $520 million. The transaction marks the Company's entry into the Pacific Northwest region, and is expected to close in the third quarter of 2014, subject to the satisfaction of certain closing conditions.
Polygon Northwest has operated in the Pacific Northwest region for over 20 years, delivering approximately 16,000 homes during such time period and establishing a strong reputation for quality and customer satisfaction. Polygon Northwest is currently the largest private homebuilder in the Pacific Northwest, with #2 market positions in Seattle and Portland. Polygon Northwest's residential homebuilding business produced revenues of approximately $292 million and GAAP gross margin of 27.1% during its 2013 fiscal year ended December 31, 2013. Polygon Northwest delivered 791 new homes in 2013, and is anticipated to deliver approximately 850-900 new homes and realize operating revenues of approximately $300 million for the full year of 2014. Those figures are anticipated to increase to 1,100-1,200 new home deliveries and $450-$500 million in operating revenues in 2015.
William Lyon Homes is currently offering homes in California, Arizona, Nevada and Colorado, and in its more than 58 years of homebuilding operations has sold in excess of 76,000 homes. On a pro forma basis for the transaction, the Company anticipates that it will own or control at closing over 18,000 lots in some of the most dynamic and land-constrained markets in the West.
"The addition of Polygon's residential homebuilding business to the William Lyon Homes family enables us to realize our goal of becoming the premier Western U.S. regional homebuilder," said William H. Lyon, Chief Executive Officer of William Lyon Homes. "We expect this acquisition to drive meaningful top-line growth for the Company, generate significant cash flows over the coming years, improve our SG&A leverage, and to be accretive on an earnings basis to our shareholders."
"We are very excited about the combination of the two companies," stated Jeff Gow, Chief Executive Officer of Polygon Northwest. "We share many of the same core values, and William Lyon Homes has consistently demonstrated a commitment toward supporting their employees to deliver customers both outstanding quality homes and a truly great home buying experience."
Upon the closing of the transaction, it is anticipated that the acquired entities will begin operating as two new divisions of William Lyon Homes under the Polygon name, one in Washington with a core market of Seattle, and the other in Oregon with a core market of Portland. Derek Straight, the existing President of Polygon's Washington operations, and Fred Gast, the existing President of Polygon's Oregon operations, will continue to run their respective divisions as newly appointed Division Presidents of William Lyon Homes, and will report to Matthew R. Zaist, President and Chief Operating Officer.
"We are thrilled to bring Derek and Fred and their respective teams on board as integral components of the William Lyon Homes team on a go-forward basis," said Mr. Zaist. "The Polygon management team brings a tremendous amount of industry experience through which they have developed a reputation for high quality construction and customer satisfaction, and fostered deep local relationships that our combined Company can leverage for future growth. Further, this acquisition increases our supply of owned and controlled lots by approximately 30%, adding over 4,200 lots in two of the most land-constrained markets in the country where there are significant barriers to entry."