Irvine has gotten the nod over Westlake Village in the merger of Standard Pacific Corp. and Ryland Group Inc.
The two California-based homebuilders last week closed the combination of operations of their two companies. They form the fourth-largest builder in the U.S. by revenue, with about $5.2 billion in combined annual sales and 76,000 home lots under its control.
The new operation is now known as CalAtlantic Group Inc., with shares traded on the New York Stock Exchange under the ticker symbol CAA.
The combined company will continue to sell homes under both the Standard Pacific and Ryland names.
CalAtlantic is an Orange County-based company for the time being, with Standard Pacific’s headquarters in Irvine to serve as the main base for the company’s California operations.
CalAtlantic will have a “bi-coastal corporate presence” with operations in Orange County and Northern Virginia, the company said last week.
The location of the Northern Virginia office has yet to be disclosed and hasn’t opened yet.
When the deal—described by both builders as a “merger of equals”—was first announced in June, company executives said that the combined company could look to establish a new headquarters location on the East Coast.
Standard Pacific has long called Orange County home, while Ryland had been based in Westlake Village, which straddles the Ventura and Los Angeles county line.
Ryland’s Westlake Village offices will close, company officials said.
Executive Lineup
Scott Stowell, Standard Pacific’s current chief executive, will remain based in Irvine and is taking on the executive chairman role at CalAtlantic.
Ryland Chief Executive Larry Nicholson is assuming the same role at CalAtlantic and will work out of the East Coast offices.
Other notable Standard Pacific executives retaining their roles under the CalAtlantic name include Jeff McCall, chief financial officer; Wendy Marlett, chief marketing officer; and John Babel, general counsel.
“Given the company’s geographic breadth, having a bi-coastal corporate presence will allow CalAtlantic to most effectively manage its national homebuilding operations,” the company said in a statement last week.
Which of those two locations will technically serve as the CalAtlantic corporate headquarters hasn’t been disclosed.
A move east for the corporate headquarters could mean the combined operations take on a structure similar to that of Lennar Corp., the No. 2 homebuilder in the U.S. by sales. Lennar has headquarters in Miami but runs much of its day-to-day operations from Aliso Viejo.
CalAtlantic has an equity market capitalization of about $5.4 billion, which would place it among the top five Orange County public companies in terms of market value.
Standard Pacific and Ryland sell homes in 17 states, with California the largest market, representing about 27% of all sales.
California was responsible for about 46% of Standard Pacific’s revenue prior to the merger.
Texas—the largest market for Ryland—will be the No. 2 market for CalAtlantic, with about 19% of sales.
Both Standard Pacific and Ryland are building homes at some of the area’s bigger developments to open in recent weeks.
Standard Pacific and Ryland are among the companies selling homes at Beacon Park, the 960-home project that’s the second community at Great Park Neighborhoods in Irvine.
The two companies are also involved in the first phase of development at Esencia, the second village at the ranch community of Rancho Mission Viejo, which opened last month.
Standard Pacific also is heading up development of Greenwood, a 375-home project at Tustin Legacy that opened in June.
Despite the continued emphasis on the Irvine offices, some local job cuts appear likely in the wake of the deal. The two companies said they expected to save as much as $70 million in annual costs from the deal as a result of overlap in both firms’ corporate and mortgage operations, among other moves.
Up to 10% of Ryland and Standard Pacific’s existing employee base could be cut, particularly in areas where both companies have overlapping operations, according to officials.
Standard Pacific had about 220 workers in Orange County as of February, according to Business Journal data.
The company was founded by Ronald Foell and Art Svenden in Costa Mesa 50 years ago, relocated to Irvine in 2000 and has built more than 50,000 homes. It has long been the largest homebuilder based in OC.
OC Deals
The Standard Pacific deal with Ryland marks the largest of three major buys featuring an OC builder to be announced in the past two years.
TRI Pointe Homes Inc. in Irvine announced in 2013 a $2.8 billion cash-and-stock deal to buy the homebuilding division of Federal Way, Wash.-based timber conglomerate Weyerhaeuser Co.
That deal, which closed last year, is expected to vault TRI Pointe—formed in 2009 and now operating under the TRI Pointe Group name—to a place among the top 10 builders once it ramps up sales at the Weyerhaeuser Co. builders it acquired.
Newport Beach-based William Lyon Homes paid $520 million to buy the homebuilding operations of Polygon Northwest Co. last year, acquiring the country’s 40th-largest builder by sales that year.
The deal with Polygon gives William Lyon Homes a presence in the Pacific Northwest. The combined company’s operations last year would make it No. 20 among all builders in the U.S. based on sales.
