Manufactured Housing Industry Transaction Being Finalized, Planned for Completion in October
Cavco Industries has signed a binding offer for the purchase of Commodore Homes, the nation’s largest independent manufactured home builder.
Cavco is traded on the Nasdaq under the ticker symbol CVCO.
The scheduled Commodore acquisition is expected to be complete in October. The acquisition provides an increased market presence for Arizona-based Cavco in the midwest and mid-Atlantic markets, as well as an entry to the northeast housing market.
The purchase price for the acquisition is about $150 million, though pricing adjustments are anticipated in the months to come.
Cavco President Bill Boor said he and other executives with the two companies have been meeting and will continue to meet as filings are made and the transaction is made final. Part of the filings and approval is a regulatory review.
“We don’t think there is an issue created by this transaction, mostly because it really is a new territory for us. We have done very little business to this point in the northeast,” Boor said. “And a lot of the Commodore product is modular, and that’s something we only have going in one plant currently. We have new geography, and new product in the transaction so we don’t expect a problem with anti-trust.”
He said the daily agenda is 100% getting ready for the transition.
“We at Cavco have a long history of acquisitions, and we typically want to keep people in positions, but there are bound to be areas of duplication where we might make a shift,” Boor said. “Even if a position isn’t changing, there are different administrative processes. There’s a lot of work that goes into figuring out what we’re going to focus on day one, day 30, and in six months, how are we going to bring these two companies together?”
Acquiring Commodore means Cavco will assume and operate six new manufacturing facilities, two retail locations, and a home finance organization.
Boor said Commodore brands should remain intact following the acquisition, as has been the case with Fleetwood a dozen years ago and Palm Harbor about 10 years go.
“We do not intend to change them,” he said. “Those brands have a lot of value for the dealers and for homebuyers in the market.”
Boor praised the vision and work ethic developed at Commodore under Barry Shein’s leadership. He said the company has a reputation for quality, design, customer relationships, and integrity that is very consistent with Cavco’s philosophy and approach to doing business.
“This deal took quite a while to put together and the upside is that we really got to know each other really well,” Boor said. “They’re very knowledgeable and very good people for us to be working with.”
Commodore builds manufactured homes in two states — Indiana and Pennsylvania — under the brand names Commodore Homes of Pennsylvania, Commodore Homes of Indiana, Colony Homes, MidCountry Homes, Pennwest Homes, and R-Anell Homes. The company has about 1,200 employees and operates across the northeast, midwest and mid-Atlantic regions. Its retail operations are in Indiana and New York.
Commodore generated net sales of approximately $258 million and sold over 6,600 modules, equating to over 3,700 homes, in the last 12 months, according to a joint press release issued by the companies.
Commodore President and CEO Barry Shein said he and his team feel they’ve found a great fit with Cavco.
“Based on their vision for the industry and business philosophy, I have complete confidence that this is the right move for our dedicated associates, our valued suppliers, and our long-time customers,” Shein said. “I offer my full support to ensure a smooth transition and a successful future for Commodore and its employees as part of the Cavco family.”
Boor said he anticipates a good blend of business practices prevailing from the transaction.
“There are huge opportunities in operations. A lot of times when one company buys another there’s a tendency to come in and say you’re going to implement all of operating procedures across the new locations,” Boor said. “The really interesting thing is that Commodore does some stuff in manufacturing that I am really looking forward to investigating and bringing into all of our plants.”
In a separate announcement from Cavco earlier in July, the company said it has completed a 22,400 square foot expansion of its Palm Harbor operating facilities in Forth Worth, Texas. Eric Fletemeyer, general manager for the facility, said the added space means six new stations for homebuilding.
“Our plant will enjoy increased output, less rework, improved drying times, fewer delays, and fewer defects, while helping to create a highly efficient and employee-friendly workplace,” he said.