Kaufman and Broad to Acquire Tucson-Based Estes Homes, Accelerating Its Growth in Arizona

LOS ANGELES, Calif. (March 12, 1998) -- Kaufman and Broad Home Corporation (NYSE:KBH) today announced that it has reached an agreement to acquire Tucson-based Estes Homes -- one of Arizona's oldest homebuilding companies. The acquisition is expected to be modestly accretive to earnings per share in 1998, and significantly accretive in 1999.

 

"Estes Homes has tremendous talent and an enduring tradition in Arizona's homebuilding community," stated Bruce Karatz, Kaufman and Broad's chairman and chief executive officer. "Together, we have over 90 years of homebuilding experience. We're looking to the team at Estes Homes to help us achieve our ambitious growth objectives in Arizona."

Estes Homes is expected to deliver approximately 850 homes in Tucson and Phoenix in calendar 1998, and provide revenues of approximately $100 million. Kaufman and Broad will pay a total of $47 million for 100% of the equity in the company, including the assumption of debt. The agreement includes access to approximately 2,600 owned and controlled lots with additional lot purchases in process in both Phoenix and Tucson.

In conjunction with Kaufman and Broad's fast growing, existing division based in Phoenix, the combined businesses are expected to deliver approximately 2000 homes in 1999 -- placing the company among Arizona's largest builders. Kaufman and Broad expects to employ its KB2000 operating model to maximize margins, as well as benefits from increased pre-tax income related to mortgage loans provided by Kaufman and Broad Mortgage Company.

"Estes Homes shares with Kaufman and Broad a wealth of homebuilding experience and closely held traditions," says Bill Estes, Jr., president of Estes Homes and son of its founder, Bill Estes, Sr. "At the same time, we've long admired the innovations they've brought to the homebuilding industry. Combining the strengths and experience of our two companies will serve our customers and our community very well."

The acquisition by Kaufman and Broad is subject to due diligence and final documentation. The Estes transaction is the latest in a series of acquisitions that significantly increase Kaufman and Broad's market penetration throughout the West. In the last two weeks, the company announced agreements to acquire Denver-based PrideMark Homes and Houston-based Hallmark Residential Group, parent company to Dover Homes and Ideal Builders. These acquisitions are consistent with an ongoing corporate strategy to achieve dominant market position in key markets by means of both acquisitions and increases in numbers of new home communities.

Los Angeles-based Kaufman and Broad Home Corporation is the largest home builder West of the Mississippi, with operating divisions in California, Texas, Nevada, Arizona, Colorado, Utah and New Mexico. The company is also among the largest builders in metropolitan Paris, France.

NOTE TO EDITOR: Kaufman and Broad, based in Los Angeles, is the nation's third largest builder, delivering some 11,500 homes in 1997 and projecting delivery of more than 13,500 units in 1998.

For More Information Contact:
Kate Mulhearn
(310) 231-4015
kmulhearn@kbhome.com