Dream Finders Homes Offers $704 Million to Buy Rival Beazer

Dream Finders Homes Inc. submitted a $704 million offer to acquire rival homebuilder Beazer Homes USA Inc., which rejected the bid as too low.

Jacksonville, Florida-based DFH is offering $25.75 per share in cash for Beazer, according to a statement Monday that confirmed an earlier Bloomberg News report.

The bid represents a roughly 40% premium to Beazer’s closing price on May 5, the day on which DFH submitted the offer to the target’s board, the statement shows.

Beazer rose 34% to close at $25.16 in New York trading Monday, giving the company a market value of about $688 million.

DFH has been trying to engage with Beazer since February and has become a top-10 shareholder in its Atlanta-based peer, according to the statement.

Beazer said it has rejected multiple offers from DFH, including the latest because they undervalued the company and aren’t in the best interest of shareholders, according to a statement Monday.

“The proposals represent a significant and unwarranted discount to Beazer’s inherent value, and neither recent nor historical industry transactions support such a valuation,” Beazer said.

Executing its “multiyear goals” is the best path forward, the company added.

DFH, which is controlled by Chairman and Chief Executive Officer Patrick Zalupski, has a market value of about $1.3 billion.

“They haven’t engaged, there’s been no engagement, and thus our concern as a top-10 shareholder,” Zalupski said in an interview. “The lack of engagement is concerning as we feel this, an all-cash deal at a 40% premium, is the right thing for shareholders of Beazer. It doesn’t feel hostile to BZH shareholders, it feels friendly to BZH shareholders.”

While the latest offer carries a 40% premium, it’s still below the “typical homebuilder M&A precedent” of one times book value, B. Riley Securities analyst Rohit Seth said in a research note.

DFH and Beazer both design and build single-family homes — a part of the economy that has come under closer scrutiny from US President Donald Trump amid concerns around affordability.

Trump signed an executive order in March focused on cutting red tape around housing construction, eliminating rules that constrain development and affordability. In January, he signed an order aimed at preventing large institutional investors from buying single-family homes looking to convert them into rental properties.

“Bringing these two companies together would absolutely drive more affordability to homebuilding customers across the country,” Zalupski said. “It’s a challenging environment and costs are still high — the administration is focused on that — but build costs, land costs, interest rates all add to the value proposition for the customer who wants to buy a home.”

Zalupski became the majority owner of the Tampa Bay Rays Major League Baseball team last year, according to the team’s website.