Berkshire Hathaway announced in late May that it will wholly acquire homebuilder Taylor Morrison for $8.5 billion in cash. The deal comes as the U.S. housing market faces headwinds, with Taylor Morrison's first-quarter revenue falling 27% year over year and per-share earnings more than halved. New Berkshire CEO Greg Abel appears to be following predecessor Warren Buffett's philosophy of being greedy when others are fearful, betting on a cyclical recovery. A White House report suggests the nation needs another 10 million homes, while fewer than 1.5 million were built last year, underscoring long-term demand. The acquisition price values Taylor Morrison at 13.6 times this year's projected per-share earnings of $5.29.
Taylor Morn HomeTaylor Morrison is being acquired at a premium valuation of 13.6 times earnings, providing a cash exit for shareholders.
DR Horton Inc
Berkshire Hathaway IncBerkshire Hathaway is the acquirer in an $8.5 billion cash deal, deploying capital in line with its value-investing strategy.