The Japanese homebuilder deal hunt is picking up speed as Sekisui House Ltd. announced a $4.9 billion agreement to acquire MDC Holdings Inc., marking a significant move in its efforts to diversify beyond Japan. This acquisition is likely the largest US purchase of a homebuilder by a Japanese company, according to investment banker Margaret Whelan. The deal reflects the growing appetite among Japanese buyers for larger transactions as they expand their presence in the US market.
Asian buyers, particularly those from Japan, have been actively involved in the US homebuilding market for the past decade, with at least 29 builders or related companies being acquired in the country. The increasing interest from Japanese companies in larger deals is driven by the challenges posed by a declining population at home. According to Whelan, a separate transaction involving a Japanese company purchasing a regional homebuilder is set to be announced next week, indicating a significant shift in the scale of their acquisitions.
Homebuilders in the US have experienced heightened demand for newly built properties amidst tight inventory, leading to increased competition among buyers. This trend has emphasized the importance of scale for builders, prompting a series of acquisitions and mergers within the industry. Sekisui House, in particular, has been actively expanding its presence in the US market since 2017, acquiring several US builders including Woodside Homes, Holt Homes, and Chesmar Homes. The latest deal with MDC Holdings, offering shareholders $63 per share, is expected to strengthen Sekisui House’s operations in heavily populated states such as California, Texas, and Florida.
The acquisition of MDC Holdings is part of a broader trend of overseas investments by Japanese companies, driven by concerns about limited growth prospects in the domestic market due to the country’s accelerating population decline. This move comes on the heels of Nippon Steel Corp.’s proposed takeover of United States Steel Corp, reflecting a wave of significant deals across various industries. With Japan’s exchange rate steadily depreciating in recent years, overseas acquisitions have become increasingly attractive for Japanese companies seeking growth opportunities beyond their domestic market.
