Lennar Makes Deal for CalAtlantic as Home Dealers Face Challenges

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Lennar Makes Deal for CalAtlantic as Home Dealers Face Challenges
The challenges in the United States homebuilding sector have resulted in the decision of a merger between the two dominant residential-construction firms in the nation. The challenges which include need for efficiencies and occurrence of natural disasters have caused Lennar Corporation to settle on a merger deal with CalAtlantic group worth $5.7 billion dollars CITATION CHA17 \l 1033 (GOLDSTEIN and BRAY). The resulting home builder company would be big enough to ensure efficiency by countering debts and maximizing profits. It would also hopefully combat the challenges faced in the sector. The main aim of the merger company would be to ensure viable returns by building more residential houses. However, this deal may not solve the basic problems since current construction of houses in the U.S is lower and costly than historical averages. According to a chief economist, Ralph McLaughlin, the merger company should focus on overcoming the impact natural calamities such as hurricanes on houses. CalAtlantic group and Lennar Corporations are expected to complete the deal in early 2018 after shareholder approval. This article highlights several strategic components including environmental and economic components of the PESTEL framework. Additionally, it involves the issues of mergers and acquisition among companies dealing in the same industry.
The fact that Lennar Corporations and CalAtlantic group are uniting to work together as one company under the house construction industry indicates a merger. Given that both companies are in the industry, working together would bring about efficiencies. The calAtlantic group will hold 42.6% of the share whereas Lennar Corporations would hold 41.4% of the merger. In order to achieve this, this is in accordance with the terms of the deal whi...