Its acquisition of Taylor Morrison Home shows it believes the housing market will come back. It’s just not saying when.
Under legendary leader Warren Buffett Berkshire Hathaway invested modestly in the home and home furnishings industry so industry observers wondered if his successor Greg Abel would continue along the same path. Last month he did. Abel made out a virtual Berkshire check for $8.5 billion to buy Taylor Morrison, ranked as the sixth-largest home builder in the country and one that focuses more on the luxury end of the market. For Taylor Morrison, the acquisition signals Berkshire’s confidence in the luxury segment emerging as the housing market’s strongest once a recovery takes hold. Berkshire has a reputation for buying into companies and sectors that are currently having struggles but have long-term growth potential.
“Berkshire is acquiring a best-in-class national home builder, led by an exceptional team and backed by a trusted reputation for customer experience,” Abel said in announcing the deal, “We are excited to welcome Taylor Morrison into Berkshire’s portfolio, reflecting our long-standing commitment to housing, exemplified by Clayton Homes and our other building products businesses. Over time, we expect to unify our site-built home building operations into a combined platform enabling us to deliver the dream of homeownership to more Americans.”
Clayton specializes in manufactured homes so this puts Berkshire into the site-built sector in a larger way. It also owns a number of home furnishings retailers as well as Shaw, the floor coverings giant.
Taylor operates in 21 markets across 12 states and 350 communities, the company said. It builds under the
Taylor Morrison and Esplanade brands and also develops rental communities under its Yardly brand. In addition it provides financial services to its customers, including mortgage, title and escrow and homeowners’ insurance. Berkshire said Taylor’s current management will remain once the deal closes, which is expected to occur in the second half of this year.
“Joining Berkshire Hathaway is a once-in-a-lifetime opportunity to propel Taylor Morrison into its next, and most exciting, chapter, supported by Berkshire’s unmatched capital strength and long-term investment philosophy,” said Sheryl Palmer, Taylor’s chairman and CEO. “Over the last 13 years as a public company, we built a track record of strategic growth, expanding our geographic footprint, integrating acquisitions with discipline and deepening our competitive strengths across procurement, brand and customer experience.
