On January 31, Writer and Standard Pacific Corp. president Stephen Scarborough issued a joint press release stating that both firms have signed a letter of intent for Standard Pacific to acquire Writer Corp. for $3.42 per share of the firm’s common stock, or $27.4 million, plus assumption of $27 million in debt.
The acquisition consideration will be payable in a combination of cash and Standard Pacific common stock, with Writer’s public shareholders entitled to choose to receive up to the entire purchase price in cash. Writer, 64, PB’s 1977 Builder Of The Year, was the subject of a One-on-One interview published in this magazine in November. When asked then if the length of the current building boom surprised him, Writer responded, "Nothing surprises me anymore. But Lee Evans saying, ‘If you stay in this business long enough, you’ll go broke,’ always haunts me."
Obviously, Writer can quit worrying now. However, he has committed to stay with the firm for "at least several years." Writer Corp. president Dan Nickless has also signed on, and Writer confides that he expects little outward sign of change after the deal closes:
"Our name will stay the same. We believe we’ll operate with a reasonable degree of autonomy, as long as we continue to perform. Standard Pacific has a very small central office. Product design is handled in the divisions, and that’s one of our strengths. They like our land development expertise, and the fact that we do so well with attached product, even though they are primarily a single-family builder."
Writer acknowledges that Standard Pacific sought the deal as a means of entry into the crowded Denver home building market. "I’ve been talking to them for about two years," says Geoie, "and seriously for six months. It’s a great fit. They get into Denver, we get the boost we need to get to the next level."
In 1999, Writer Corp. closed 383 homes for $82 million in revenues. The firm now ranks 14th in Denver new home sales, according to Genesis Marketing Group, a local research firm that tracks the metro market. The firm recently expanded into the Ft. Collins market, north of Denver.
"We’re unique among Denver builders as a true community developer, doing land planning, development, and entitlements as well as home design and building," says Writer. "Standard Pacific likes that, and all our (new projects) in Ft. Collins are now ready to go," he says.
"The fact that all home builder stocks are now so depressed (in price) made this deal a little harder to put together, but it helped that both companies are public. We’re betting on the long-term future of Standard Pacific stock. With their size, which is about 15 times ours, and geographic diversity, we think the long-term prospects are that their stock will outperform what we could achieve on our own. And this deal will allow us to build on the strength of our current land positions."
Standard Pacific president Stephen Scarborough said his firm is "particularly pleased to be entering this dynamic market through the acquisition of a successful builder, led by an experienced and talented local management team."