424B3
Filed
pursuant to rule 424(b)(3)
Registration No. 333-158974
MERGER
PROPOSED YOUR VOTE IS VERY IMPORTANT
Pulte Homes, Inc. and Centex Corporation have agreed to a merger
that combines Pulte and Centex, subject to approval of
Pultes shareholders and Centexs stockholders and
other customary closing conditions. If the proposed merger is
completed, each outstanding share of Centex common stock (other
than those shares held by Pulte or its merger subsidiary Pi
Nevada Building Company, and other than treasury shares) will be
converted into the right to receive 0.975 of a share of Pulte
common stock. Certain directors and officers of Pulte, including
Pultes founder and chairman William J. Pulte, and certain
directors and officers of Centex entered into voting agreements
pursuant to which they have agreed to vote their shares of Pulte
or Centex, as applicable, in support of the transaction.
In the merger, Pulte expects to issue approximately
128.1 million shares of Pulte common stock to Centex
stockholders, based on Centexs shares of common stock and
equity awards outstanding as of July 10, 2009. Immediately
following the merger, current Centex stockholders are expected
to own approximately 32.1%, and current Pulte shareholders are
expected to own approximately 67.9%, of the outstanding shares
of Pulte common stock. The merger will have no effect on the
number of shares owned by existing Pulte shareholders. The 0.975
exchange ratio is fixed and will not be adjusted for changes in
the stock prices of either company before the merger is
completed. Pulte common stock is traded on the New York Stock
Exchange under the trading symbol PHM. On
July 17, 2009, Pulte common stock closed at $9.14 per share
as reported on the New York Stock Exchange.
The completion of the merger is conditioned upon Pultes
shareholders approving the issuance of shares of Pulte common
stock to Centex stockholders in the merger and the amendment of
Pultes Restated Articles of Incorporation to increase the
total number of authorized shares of common stock, and
Centexs stockholders approving the merger agreement.
The boards of directors of Pulte and Centex unanimously
recommend that their respective shareholders and stockholders
vote FOR the proposals before them.
The proposals are being presented to the respective shareholders
and stockholders of each company at their special meetings. The
dates, times and places of the meetings are as follows:
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For Pulte shareholders:
August 18, 2009, 10:00 a.m., local time, at
Auburn Hills Marriott Pontiac at Centerpoint
3600 Centerpoint Parkway
Pontiac, Michigan 48341
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For Centex stockholders:
August 18, 2009, 11:00 a.m., local time, at
Centex Corporation, 10th Floor
2728 N. Harwood Street
Dallas, Texas 75201
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Your vote is very important. Whether or not you plan
to attend your companys special meeting, please take the
time to vote by completing and mailing the enclosed proxy card
or voting instruction card or, if the option is available to
you, by granting your proxy electronically over the Internet or
by telephone.
This joint proxy statement/prospectus contains important
information about Pulte, Centex, the merger agreement, the
proposed merger and the special meetings. We encourage you to
read carefully this joint proxy statement/prospectus before
voting, including the section entitled Risk Factors
beginning on page 19.
Sincerely,
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Richard J. Dugas, Jr.
President and Chief Executive Officer
Pulte Homes, Inc.
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Timothy R. Eller
Chairman and Chief Executive Officer
Centex Corporation
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Neither the Securities and Exchange Commission nor any state
securities regulator has approved or disapproved of the
transactions described in this joint proxy statement/prospectus
or the securities to be issued pursuant to the merger or
determined if the information contained in this joint proxy
statement/prospectus is accurate or adequate. Any representation
to the contrary is a criminal offense.
This joint proxy statement/prospectus is dated July 17, 2009,
and is being mailed to Pulte shareholders and Centex
stockholders on or about July 21, 2009.
PULTE
HOMES, INC.
100 Bloomfield Hills Parkway, Suite 300
Bloomfield Hills, Michigan 48304
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 18, 2009
To the Shareholders of Pulte Homes, Inc.:
We will hold a special meeting of shareholders of Pulte at the
Auburn Hills Marriott Pontiac at Centerpoint, located at 3600
Centerpoint Parkway, Pontiac, Michigan, on August 18, 2009,
at 10:00 a.m., local time, for the following purposes:
1. To consider and vote upon a proposal to approve the
issuance of shares of Pulte common stock pursuant to the
Agreement and Plan of Merger, dated as of April 7, 2009, by
and among Pulte, a wholly owned subsidiary of Pulte and Centex
Corporation.
2. To consider and vote upon a proposal to amend the Pulte
Restated Articles of Incorporation to increase the total number
of shares of common stock that Pulte is authorized to issue from
400,000,000 to 500,000,000.
3. To consider and vote upon a proposal to amend the Pulte
Restated Articles of Incorporation to change Pultes
corporate name to PulteGroup, Inc.
4. To consider and vote upon a proposal to adjourn the
special meeting, if necessary, to solicit additional proxies if
there are not sufficient votes in favor of proposal 1 or 2.
5. To transact any other business as may properly come
before the special meeting.
Only Pulte shareholders of record at the close of business on
July 10, 2009, the record date for the special meeting, are
entitled to notice of and to vote at the special meeting.
The Pulte board of directors unanimously recommends that you
vote FOR the approval of the issuance of shares of
Pulte common stock in the merger, FOR the amendment
of Pultes Restated Articles of Incorporation to increase
the number of authorized shares of common stock, FOR
the amendment of Pultes Restated Articles of Incorporation
to change Pultes corporate name and FOR the
adjournment of the special meeting, if necessary, to solicit
additional proxies if there are not sufficient votes in favor of
proposal 1 or 2.
A list of shareholders eligible to vote at the Pulte special
meeting will be available for inspection at the special meeting.
Your vote is very important. It is important
that your shares be represented and voted whether or not you
plan to attend the special meeting in person. Instructions
regarding the different methods for voting your shares are
provided under the section entitled Questions and Answers
About the Special Meetings of Pulte Shareholders and Centex
Stockholders beginning on page iv.
By Order of the Board of Directors,
Richard J. Dugas, Jr.
President and Chief Executive Officer
Pulte Homes, Inc.
July 17, 2009
CENTEX
CORPORATION
2728 N. Harwood Street
Dallas, Texas 75201
NOTICE OF
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 18, 2009
To the Stockholders of Centex Corporation:
We will hold a special meeting of stockholders of Centex on the
10th floor of our headquarters building, located at
2728 N. Harwood Street, Dallas, Texas, on
August 18, 2009, at 11:00 a.m., local time, for the
following purposes:
1. To consider and vote upon a proposal to approve the
Agreement and Plan of Merger, dated as of April 7, 2009, by
and among Centex, Pulte Homes, Inc. and a wholly owned
subsidiary of Pulte Homes, Inc.
2. To consider and vote upon a proposal to adjourn the
special meeting, if necessary, to solicit additional proxies if
there are not sufficient votes in favor of the foregoing.
3. To transact any other business as may properly come
before the special meeting.
Only Centex stockholders of record at the close of business on
July 10, 2009, the record date for the special meeting, are
entitled to notice of and to vote at the special meeting.
The Centex board of directors unanimously recommends that you
vote FOR the approval of the Agreement and Plan of
Merger and FOR the adjournment of the special
meeting, if necessary, to solicit additional proxies if there
are not sufficient votes in favor of the foregoing.
A list of stockholders eligible to vote at the Centex special
meeting will be available for inspection at the special meeting,
and at the executive offices of Centex during regular business
hours for a period of no less than ten days prior to the special
meeting.
Your vote is very important. It is important that
your shares be represented and voted whether or not you plan to
attend the special meeting in person. Instructions regarding the
different methods for voting your shares are provided under the
section entitled Questions and Answers About the Special
Meetings of Pulte Shareholders and Centex Stockholders
beginning on page iv.
By Order of the Board of Directors,
Timothy R. Eller
Chairman and Chief Executive Officer
Centex Corporation
July 17, 2009
ADDITIONAL
INFORMATION
This joint proxy statement/prospectus incorporates by reference
important business and financial information about Pulte and
Centex from documents that are not included in or delivered with
this joint proxy statement/prospectus. For a more detailed
description of the information incorporated by reference into
this joint proxy statement/prospectus and how you may obtain it,
see Additional Information Where You Can Find
More Information beginning on page 134.
You can obtain any of the documents incorporated by reference
into this joint proxy statement/prospectus without charge from
Pulte or Centex, as applicable, or from the Securities and
Exchange Commission, which we refer to as the SEC, through the
SECs website at www.sec.gov. Pulte shareholders and
Centex stockholders may request a copy of such documents in
writing or by telephone by contacting:
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Pulte Homes, Inc.
100 Bloomfield Hills Parkway, Suite 300
Bloomfield Hills, Michigan 48304
Attn.: Investor Relations
(248) 647-2750
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Centex Corporation
P.O. Box 199000
Dallas, Texas 75219-9000
Attn.: Investor Relations
(214) 981-5000
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In addition, you may obtain copies of some of this information
by accessing Pultes website at www.pulte.com under
the heading Investor Relations and then under the
link SEC Filings.
You may also obtain copies of some of this information by
accessing Centexs website at www.centex.com under
the heading Investors, under the link
Financials, and then under the link SEC
Filings.
We are not incorporating the contents of the websites of the
SEC, Pulte, Centex or any other entity into this joint proxy
statement/prospectus. We are providing the information about how
you can obtain certain documents that are incorporated by
reference into this joint proxy statement/prospectus at these
websites only for your convenience.
In order for you to receive timely delivery of the documents
in advance of the respective Pulte and Centex special meetings,
Pulte or Centex, as applicable, must receive your request no
later than 5 days prior to the date of your companys
special meeting.
TABLE OF
CONTENTS
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iv
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A-1
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B-1
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iii
QUESTIONS
AND ANSWERS ABOUT
THE SPECIAL MEETINGS OF PULTE SHAREHOLDERS AND CENTEX
STOCKHOLDERS
The following are some questions that you, as a shareholder
of Pulte or as a stockholder of Centex, may have regarding the
special meeting of Pulte shareholders, which we refer to as the
Pulte special meeting, or the special meeting of Centex
stockholders, which we refer to as the Centex special meeting,
and brief answers to those questions. For more detailed
information about the matters discussed in these questions and
answers, see The Pulte Special Meeting beginning on
page 28 and The Centex Special Meeting
beginning on page 33. Pulte and Centex encourage you to
read carefully the remainder of this joint proxy
statement/prospectus because the information in this section
does not provide all of the information that might be important
to you with respect to the merger and the other matters being
considered at the Pulte special meeting or the Centex special
meeting. Additional important information is also contained in
the Annexes to and in the documents incorporated by reference
into this joint proxy statement/prospectus.
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When and where will the special meetings of the Pulte
shareholders and Centex stockholders be held? |
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The Pulte special meeting will take place at the Auburn Hills
Marriott Pontiac at Centerpoint, 3600 Centerpoint Parkway,
Pontiac, Michigan, on August 18, 2009, at 10:00 a.m.,
local time. |
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The Centex special meeting will take place on the 10th floor of
Centexs headquarters building, 2728 N. Harwood
Street, Dallas, Texas, on August 18, 2009, at
11:00 a.m., local time. |
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Who can attend and vote at the special meetings? |
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Only holders of record of Pulte common stock at the close of
business on July 10, 2009, which we refer to as the Pulte
record date, are entitled to notice of and to vote at the Pulte
special meeting. As of the Pulte record date, there were
258,603,672 shares of Pulte common stock outstanding and
entitled to vote at the Pulte special meeting, held by
1,760 holders of record. Each holder of Pulte common stock
is entitled to one vote for each share of Pulte common stock
owned as of the Pulte record date. |
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Only holders of record of Centex common stock at the close of
business on July 10, 2009, which we refer to as the Centex
record date, are entitled to notice of and to vote at the Centex
special meeting. As of the Centex record date, there were
125,319,612 shares of Centex common stock outstanding and
entitled to vote at the Centex special meeting, held by
2,893 holders of record. Each holder of Centex common stock
is entitled to one vote for each share of Centex common stock
owned as of the Centex record date. |
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What are Pulte shareholders voting to approve and why is this
approval necessary? |
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Pulte shareholders are voting on a proposal to approve the
issuance of shares of Pulte common stock pursuant to the
Agreement and Plan of Merger, dated as of April 7, 2009, by
and among Pulte, Pi Nevada Building Company, a wholly owned
subsidiary of Pulte, and Centex, which we refer to as the Merger
Agreement. The approval by Pulte shareholders of this proposal,
which we refer to as the proposal to approve the issuance of
shares in the merger, is required by the listing requirements of
the New York Stock Exchange, which we refer to as the NYSE, and
is a condition to the completion of the merger. Based on the
number of shares of Centex common stock and Centex equity awards
outstanding as of the Pulte record date, Pulte expects to issue
up to approximately 128.1 million shares of Pulte common
stock pursuant to the Merger Agreement. |
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Pulte shareholders are also voting on a proposal to amend
Pultes Restated Articles of Incorporation to increase the
number of authorized shares of Pulte common stock from
400,000,000 to 500,000,000. The approval by Pulte shareholders
of this proposal, which we refer to as the proposal to approve
the charter amendment to increase the number of authorized
shares of common stock, is required so that Pulte has sufficient
authorized shares of common stock to issue in the merger and for
other corporate purposes and is also a condition to the
completion of the merger. If the proposal to approve the charter
amendment to increase the number of authorized shares of common
stock is not approved by Pultes shareholders, the |
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merger will not be completed even if the proposal to approve the
issuance of shares in the merger is approved by Pultes
shareholders. If the proposal to approve the charter amendment
to increase the number of authorized shares of common stock is
approved by Pultes shareholders, Pulte expects to file the
certificate of amendment to Pultes Restated Articles of
Incorporation reflecting the increased number of authorized
shares of common stock with the Michigan Department of Energy,
Labor and Economic Growth immediately prior to the completion of
the merger, but if the Merger Agreement is terminated (and the
merger is not completed), Pulte will not file the certificate of
amendment reflecting the increased number of authorized shares
of common stock and the amendment will not become effective. If
Pulte so files the certificate of amendment and the merger is
not completed, Pulte reserves the right to abandon the amendment
in accordance with the provisions of the Michigan Business
Corporation Act, which we refer to as the MBCA. |
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Pulte shareholders are also voting on a proposal to amend
Pultes Restated Articles of Incorporation to change
Pultes corporate name from Pulte Homes, Inc.
to PulteGroup, Inc. Pulte believes that the new
corporate name will better reflect the companys new
branding strategy, which it expects to implement in the months
following the Pulte special meeting, whether or not the merger
is completed. The approval by Pulte shareholders of this
proposal, which we refer to as the proposal to approve the
charter amendment to change Pultes corporate name, is not
a condition to the completion of the merger. Subject to approval
of this proposal by Pultes shareholders, Pulte intends to
change its corporate name regardless of whether or not the
merger is completed. Accordingly, if the proposal to approve the
charter amendment to change Pultes corporate name is
approved by Pultes shareholders, Pulte would file a
certificate of amendment to Pultes Restated Articles of
Incorporation reflecting the change of Pultes corporate
name with the Michigan Department of Energy, Labor and Economic
Growth at the appropriate time during the implementation of its
new branding strategy. |
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Pulte shareholders are also voting on a proposal to adjourn the
Pulte special meeting, if necessary, to permit further
solicitation of proxies if there are not sufficient votes at the
time of the Pulte special meeting in favor of the proposal to
approve the issuance of shares in the merger or the proposal to
approve the charter amendment to increase the number of
authorized shares of common stock. The approval by Pulte
shareholders of this proposal, which we refer to as the Pulte
meeting adjournment proposal, is not a condition to the
completion of the merger. |
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What are Centex stockholders voting to approve and why is
this approval necessary? |
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Centex stockholders are voting on a proposal to approve the
Merger Agreement. The approval by Centex stockholders of this
proposal, which we refer to as the proposal to approve the
Merger Agreement, is required by Nevada law and is a condition
to the completion of the merger. Centex stockholders are also
voting on a proposal to adjourn the Centex special meeting, if
necessary, to permit further solicitation of proxies if there
are not sufficient votes at the time of the Centex special
meeting in favor of the proposal to approve the Merger
Agreement. The approval by Centex stockholders of this proposal,
which we refer to as the Centex meeting adjournment proposal, is
not a condition to the completion of the merger. |
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What vote of Pulte shareholders is required to approve the
proposal to approve the issuance of shares in the merger, the
proposal to approve the charter amendment to increase the number
of authorized shares of common stock, the proposal to approve
the charter amendment to change Pultes corporate name and
the Pulte meeting adjournment proposal? |
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In accordance with NYSE listing requirements, the approval by
Pulte shareholders of the proposal to approve the issuance of
shares in the merger requires a majority of the votes cast on
the proposal, provided that the total votes cast on this
proposal represent over 50% of the outstanding shares of Pulte
common stock entitled to vote on this proposal. In accordance
with Michigan law, the approval of the proposal to approve the
charter amendment to increase the number of authorized shares of
common stock and the proposal to approve the charter amendment
to change Pultes corporate name each requires the
affirmative vote of a majority of the outstanding shares
entitled to vote on the amendment and the approval of the Pulte
meeting adjournment proposal requires the affirmative vote of
the holders of a majority of the shares |
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of Pulte common stock present in person or represented by proxy
at the Pulte special meeting and entitled to vote thereon,
whether or not a quorum is present. |
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What vote of Centex stockholders is required to approve the
proposal to approve the Merger Agreement and the Centex meeting
adjournment proposal? |
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In accordance with Nevada law, the approval by Centex
stockholders of the proposal to approve the Merger Agreement
requires the affirmative vote of the holders of a majority of
the outstanding shares of Centex common stock entitled to vote
at the Centex special meeting and the approval of the Centex
meeting adjournment proposal requires the affirmative vote of
the holders of a majority of the shares of Centex common stock
present in person or represented by proxy at the Centex special
meeting and entitled to vote thereon, whether or not a quorum is
present. |
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How does the Pulte board of directors recommend that Pulte
shareholders vote? |
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The Pulte board of directors has determined that it is in the
best interests of Pulte and its shareholders, and declared it
advisable, to enter into the Merger Agreement. Accordingly, the
Pulte board of directors has approved the Merger Agreement and
the completion of the transactions contemplated thereby,
including the merger. The Pulte board of directors unanimously
recommends that Pulte shareholders vote FOR
the proposal to approve the issuance of shares in the
merger, FOR the proposal to approve the
charter amendment to increase the number of authorized shares of
common stock, FOR the proposal to approve the
charter amendment to change Pultes corporate name and
FOR the Pulte meeting adjournment proposal. |
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How does the Centex board of directors recommend that Centex
stockholders vote? |
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The Centex board of directors has determined that it is in the
best interests of Centex and its stockholders, and declared it
advisable, to enter into the Merger Agreement. Accordingly, the
Centex board of directors has approved the Merger Agreement and
the completion of the transactions contemplated thereby,
including the merger. The Centex board of directors unanimously
recommends that Centex stockholders vote FOR
the proposal to approve the Merger Agreement and
FOR the Centex meeting adjournment proposal. |
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What should Pulte shareholders and Centex stockholders do now
in order to vote on the proposals being considered at their
companys special meeting? |
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A: |
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Shareholders of record of Pulte as of the Pulte record date and
stockholders of record of Centex as of the Centex record date
may vote now by proxy by completing, signing, dating and
returning the enclosed proxy card in the accompanying
pre-addressed postage-paid envelope or by submitting a proxy
over the Internet or by telephone by following the instructions
on the enclosed proxy card. If you hold Pulte shares or Centex
shares in street name, which means your shares are
held of record by a broker, bank or nominee, you must provide
the record holder of your shares with instructions on how to
vote your shares. Please refer to the voting instruction card
used by your broker, bank or nominee to see if you may submit
voting instructions using the Internet or telephone. |
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Additionally, you may also vote in person by attending your
companys special meeting. If you plan to attend your
companys special meeting and wish to vote in person, you
will be given a ballot at the special meeting. Please note,
however, that if your shares are held in street
name, and you wish to vote in person at your
companys special meeting, you must bring a proxy from the
record holder of the shares authorizing you to vote at the
special meeting. Whether or not you plan to attend your
companys special meeting, you are encouraged to grant your
proxy as described in this joint proxy statement/prospectus. |
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Q: |
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What will happen if I abstain from voting, fail to vote or do
not direct how to vote on my proxy? |
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A: |
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The failure of a Pulte shareholder or a Centex stockholder to
vote or to instruct his or her broker to vote if his or her
shares are held in street name may have a negative
effect on the ability of Pulte or Centex, as applicable, to
obtain the number of votes necessary for approval of the
proposals. |
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For purposes of the Pulte shareholder vote, an abstention, which
occurs when a shareholder attends a meeting, either in person or
by proxy, but abstains from voting, will have the same effect as
voting against the |
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proposal to approve the issuance of shares in the merger, the
proposal to approve the charter amendment to increase the number
of authorized shares of common stock and the proposal to approve
the charter amendment to change Pultes corporate name, but
will not affect the Pulte meeting adjournment proposal. The
failure of a Pulte shareholder to vote or to instruct his or her
broker, bank or nominee to vote if his or her shares are held in
street name will have the same effect as voting
against the proposal to approve the charter amendment to
increase the number of authorized shares of common stock and the
proposal to approve the charter amendment to change Pultes
corporate name, but will not similarly affect the proposal to
approve the issuance of shares in the merger or the Pulte
meeting adjournment proposal. All properly signed proxies that
are received prior to the Pulte special meeting and that are not
revoked will be voted at the special meeting according to the
instructions indicated on the proxies or, if no direction is
indicated, they will be voted FOR the
proposal to approve the issuance of shares in the merger,
FOR the proposal to approve the charter
amendment to increase the number of authorized shares of common
stock, FOR the proposal to approve the
charter amendment to change Pultes corporate name and
FOR the Pulte meeting adjournment proposal. |
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For purposes of the Centex stockholder vote, an abstention or
the failure of a Centex stockholder to vote or to instruct his
or her broker, bank or nominee to vote if his or her shares are
held in street name will have the same effect as
voting against the proposal to approve the Merger Agreement but
will not similarly affect the Centex meeting adjournment
proposal. All properly signed proxies that are received prior to
the Centex special meeting and that are not revoked will be
voted at the special meeting according to the instructions
indicated on the proxies or, if no direction is indicated, they
will be voted FOR the proposal to approve the
Merger Agreement and FOR the Centex meeting
adjournment proposal. |
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Can I change my vote after I have delivered my proxy? |
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Yes. If you are a holder of record, you can change your vote at
any time before your proxy is voted at the special meeting by: |
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delivering a signed written notice of revocation to
the corporate secretary of your company at:
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Pulte Homes, Inc.
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Centex Corporation
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100 Bloomfield Hills Parkway, Suite 300
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2728 N. Harwood Street
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Bloomfield Hills, Michigan 48304
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Dallas, Texas 75201
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Attn.: Corporate Secretary
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Attn.: Corporate Secretary
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signing and delivering a new, valid proxy bearing a
later date and, if it is a written proxy, it must be signed and
delivered to the attention of your companys corporate
secretary;
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submitting another proxy by telephone or on the
Internet (your latest telephone or Internet voting instructions
will be followed); or
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attending the special meeting and voting in person,
although your attendance alone will not revoke your proxy.
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If your shares are held in a street name account,
you must contact your broker, bank or other nominee to change
your vote. |
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What should Pulte shareholders or Centex stockholders do if
they receive more than one set of voting materials? |
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You may receive more than one set of voting materials, including
multiple copies of this joint proxy statement/prospectus and
multiple proxy cards or voting instruction cards. For example,
if you hold your shares in more than one brokerage account, you
will receive a separate voting instruction card for each
brokerage account in which you hold shares. If you are a holder
of record and your shares are registered in more than one name,
you will receive more than one proxy card. In addition, if you
are both a shareholder of Pulte and a stockholder of Centex, you
will receive one or more separate proxy cards or voting
instruction cards for each company. Please complete, sign, date
and return each proxy card and voting instruction card that you
receive. |
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Q: |
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Should Centex stockholders send in their Centex stock
certificates now? |
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No. After the merger is completed, Centex stockholders will
be sent written instructions for exchanging their shares of
Centex common stock for shares of Pulte common stock. |
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Who can help answer my questions? |
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A: |
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If you have any questions about the merger or how to submit your
proxy, or if you need additional copies of this joint proxy
statement/prospectus, the enclosed proxy card or voting
instructions, you should contact: |
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If you are a Pulte shareholder: |
or
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Pulte Homes, Inc.
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D.F. King & Co., Inc.
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100 Bloomfield Hills Parkway, Suite 300
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48 Wall Street, 22nd Floor
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Bloomfield Hills, Michigan 48304
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New York, New York 10005
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Attn.: Investor Relations
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(800) 714-3313
(toll-free)
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(248) 647-2750
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(212) 269-5550 (collect)
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pulteproxy@dfking.com
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If you are a Centex stockholder: |
or
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Centex Corporation
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Innisfree M&A Incorporated
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P.O. Box 199000
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501 Madison Avenue, 20th Floor
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Dallas, Texas
75219-9000
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New York, New York 10022
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Attn.: Investor Relations
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(877) 717-3930
(toll-free)
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(214) 981-5000
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(212) 750-5833
(collect for banks and brokers)
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info@innisfreema.com
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(for material requests only)
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viii
SUMMARY
The following is a summary that highlights information
contained in this joint proxy statement/prospectus. This summary
may not contain all of the information that may be important to
you. For a more complete description of the Merger Agreement and
the transactions contemplated by the Merger Agreement, including
the merger, the issuance of shares in the merger and the charter
amendment to increase the number of authorized shares of common
stock, we encourage you to read carefully this entire joint
proxy statement/prospectus, including the attached Annexes. In
addition, we encourage you to read the information incorporated
by reference into this joint proxy statement/prospectus, which
includes important business and financial information about
Pulte and Centex that has been filed with the SEC. You may
obtain the information incorporated by reference into this joint
proxy statement/prospectus without charge by following the
instructions in the section entitled Additional
Information Where You Can Find More
Information beginning on page 134.
The
Companies
Pulte Homes, Inc.
100 Bloomfield Hills Parkway, Suite 300
Bloomfield Hills, Michigan 48304
(248) 647-2750
Pulte, a Michigan corporation organized in 1956, is a publicly
held holding company whose subsidiaries engage in the
homebuilding and financial services businesses. Pultes
assets consist principally of the capital stock of its
subsidiaries and its income primarily consists of dividends from
its subsidiaries. Its direct subsidiaries include Pulte
Diversified Companies, Inc., Del Webb Corporation and other
subsidiaries engaged in the homebuilding business. Pulte
Diversified Companies, Inc.s operating subsidiaries
include Pulte Home Corporation, Pulte International Corporation
and other subsidiaries engaged in the homebuilding business.
Pulte also has a mortgage banking company, Pulte Mortgage LLC,
which is a subsidiary of Pulte Home Corporation. Pulte common
stock is traded on the NYSE under the symbol PHM.
Pi Nevada Building Company
100 Bloomfield Hills Parkway, Suite 300
Bloomfield Hills, Michigan 48304
(248) 647-2750
Pi Nevada Building Company is a direct wholly owned subsidiary
of Pulte and was formed solely for the purpose of consummating
the merger. Pi Nevada Building Company has not carried on any
activities to date, except for activities incidental to its
formation and activities undertaken in connection with the
merger.
Centex Corporation
2728 N. Harwood Street
Dallas, Texas 75201
(214) 981-5000
Centex, a Nevada corporation, was founded in 1950 as a Dallas,
Texas-based residential construction company. Subsequently,
Centex expanded its business to include a broad range of
activities related to construction, construction products and
financing, but has more recently refocused operations on
residential construction and related activities, including
mortgage financing to Centexs homebuyers. Centexs
subsidiary companies operate in two principal lines of business:
Home Building and Financial Services. Home Buildings
operations currently involve the construction and sale of
detached and attached single-family homes. The land used for the
construction of Centexs homes is acquired through the
purchase of finished or partially finished lots and through the
purchase of raw land that must be developed. Financial
Services operations consist primarily of mortgage lending,
title agency services and the sale of title insurance. These
activities include mortgage origination and other related
services for homes sold by Centexs subsidiaries and
others. Centex has been in the mortgage lending business since
1973. Centex common stock is traded on the NYSE under the symbol
CTX.
1
The
Merger (see page 37)
Pulte and Centex have agreed to combine under the terms and
conditions set forth in the Merger Agreement, which we describe
in this joint proxy statement/prospectus. Pursuant to the Merger
Agreement, Pi Nevada Building Company, a wholly owned subsidiary
of Pulte, will merge with and into Centex, with Centex
continuing as the surviving corporation and a wholly owned
subsidiary of Pulte. We have attached the Merger Agreement as
Annex A to this joint proxy statement/prospectus. We
encourage you to carefully read the Merger Agreement in its
entirety. We currently expect that the merger will be completed
during the third quarter of 2009. However, we cannot predict the
actual timing.
Merger
Consideration
If you are a Centex stockholder, upon completion of the merger,
each of your shares of Centex common stock (including the
associated preferred share purchase rights granted under
Centexs stockholder rights agreement) will be converted
into the right to receive 0.975 of a share of Pulte common stock
(including the associated preferred share purchase rights
granted under Pultes shareholder rights agreement), which
we refer to as the exchange ratio. The exchange ratio is fixed,
which means that it is not subject to adjustment. Unless
otherwise indicated or the context otherwise requires, all
references in this document to shares of Pulte common stock to
be received in the transaction include the associated Pulte
preferred share purchase rights. We refer to the consideration
to be paid to the Centex stockholders by Pulte as the merger
consideration. The merger will have no effect on the number of
shares of Pulte common stock owned by existing Pulte
shareholders.
Pulte will not issue fractional shares of Pulte common stock in
the merger. As a result, a Centex stockholder will receive cash
for any fractional share of Pulte common stock that they would
otherwise be entitled to receive in the merger, which is the
only merger consideration payable in cash by Pulte in connection
with the proposed merger. For a full description of the
treatment of fractional shares, see The Merger
Agreement Fractional Shares beginning on
page 76.
Centex
Equity Awards
Stock
Options
Upon completion of the merger, each outstanding Centex stock
option granted under a Centex stock plan, whether vested or
unvested, will be converted into a vested option to purchase
Pulte common stock on the same terms and conditions (except for
vesting conditions) as were applicable to such Centex stock
option, with adjustments to the number of shares subject to the
option and the exercise price per share applicable to the option
to reflect the exchange ratio. Pursuant to the Merger Agreement,
if the Centex stock option was granted to an employee with an
exercise price less than $40.00 per share, the converted, vested
Pulte stock option will provide that, if the option holder
experiences a severance-qualifying termination of employment
during the two-year period following the merger, the stock
option will remain exercisable until the later of (1) the
third anniversary of the date of the termination of employment
and (2) the date on which the option would cease to be
exercisable in accordance with its terms (or, in either case, if
earlier, the expiration of the scheduled term of the option).
Restricted
Shares and Restricted or Deferred Stock Units
Upon completion of the merger, each outstanding award of
restricted shares of, or restricted or deferred stock units with
respect to, Centex common stock granted under a Centex stock
plan will vest and be converted into a number of shares of, or
units or deferred units with respect to, Pulte common stock on
the same terms and conditions (except for vesting conditions) as
were applicable to such award, with adjustments to the number of
shares of, or units or deferred units with respect to, Pulte
common stock to reflect the exchange ratio, except for
restricted stock and restricted stock units granted as long-term
incentive awards under the Centex equity compensation plans
after execution of the Merger Agreement and before the
completion of the merger which will not vest upon completion of
the merger.
2
Performance
Units
Immediately prior to the completion of the merger, each
outstanding award of performance units granted under a Centex
stock plan will vest and be converted into the right to receive
from Centex an amount in cash equal to the fair market value of
a share of Centex common stock on the day immediately prior to
the completion of the merger multiplied by the number of shares
of Centex common stock subject to such award (assuming the
achievement of all applicable performance goals at target
levels). Such payments represent settlement of compensatory
awards and do not constitute merger consideration.
Share
Ownership of Directors and Executive Officers
At the close of business on the Pulte record date, directors and
executive officers of Pulte and their affiliates owned and were
entitled to vote 44,652,780 shares of Pulte common stock,
collectively representing approximately 17.27% of the shares of
Pulte common stock outstanding on that date. Certain directors
and officers of Pulte, including Pultes founder and
current chairman William J. Pulte, entered into voting
agreements pursuant to which they have agreed to vote their
shares of Pulte in support of the proposals to be considered at
the Pulte special meeting.
At the close of business on the Centex record date, directors
and executive officers of Centex and their affiliates owned and
were entitled to vote 2,199,199 shares of Centex common
stock, collectively representing 1.75% of the shares of Centex
common stock outstanding on that date. Certain directors and
officers of Centex entered into voting agreements pursuant to
which they have agreed to vote their shares of Centex in support
of the proposals to be considered at the Centex special meeting.
Recommendation
of the Pulte Board of Directors and Its Reasons for the Merger
(see page 45)
After careful consideration, the Pulte board of directors
unanimously approved the Merger Agreement on April 7, 2009.
The Pulte board of directors unanimously recommends that
Pulte shareholders vote FOR the proposal to approve
the issuance of shares in the merger, FOR the
proposal to approve the charter amendment to increase the number
of authorized shares of common stock, FOR the
proposal to approve the charter amendment to change Pultes
corporate name and FOR the Pulte meeting adjournment
proposal at the Pulte special meeting.
For the factors considered by the Pulte board of directors in
reaching its decision to approve the Merger Agreement as well as
the Pulte board of directors reasons for, and certain
risks related to, the merger, see The Merger
Recommendation of the Pulte Board of Directors and Its Reasons
for the Merger beginning on page 45.
Recommendation
of the Centex Board of Directors and Its Reasons for the Merger
(see page 49)
After careful consideration, the Centex board of directors
unanimously adopted the Merger Agreement and approved the
consummation of the transactions contemplated by the Merger
Agreement, including the merger, upon the terms and subject to
the conditions set forth in the Merger Agreement on
April 7, 2009. The Centex board of directors unanimously
recommends that Centexs stockholders vote FOR
the proposal to approve the Merger Agreement and FOR
the Centex meeting adjournment proposal at the Centex special
meeting.
For the factors considered by the Centex board of directors in
reaching its decision to adopt the Merger Agreement and approve
the consummation of the transactions contemplated by the Merger
Agreement, including the merger, as well as the Centex board of
directors reasons for, and certain risks related to, the
merger, see The Merger Recommendation of the
Centex Board of Directors and Its Reasons for the Merger
beginning on page 49.
3
Opinions
of Financial Advisors (see pages 51 and 58)
Opinion
of Pultes Financial Advisor
In connection with the merger, Pultes board of directors
received a written opinion, dated April 7, 2009, from
Pultes financial advisor, Citigroup Global Markets Inc.,
which we refer to as Citi, as to the fairness, from a financial
point of view and as of the date of the opinion, to Pulte of the
0.975 exchange ratio provided for in the Merger Agreement.
The full text of Citis written opinion, which is attached
to this joint proxy statement/prospectus as Annex B, sets
forth the assumptions made, procedures followed, matters
considered and limitations on the review undertaken. Citis
opinion was provided to Pultes board of directors in
connection with its evaluation of the exchange ratio from a
financial point of view to Pulte and does not address any other
aspects or implications of the merger or the underlying business
decision of Pulte to effect the merger, the relative merits of
the merger as compared to any alternative business strategies
that might exist for Pulte or the effect of any other
transaction in which Pulte might engage. Citis opinion is
not intended to be and does not constitute a recommendation to
any securityholder as to how such securityholder should vote or
act on any matters relating to the proposed merger. Under the
terms of Citis engagement, Pulte has agreed to pay Citi a
fee for its financial advisory services in connection with the
merger, a significant portion of which is contingent upon
completion of the merger.
Opinion
of Centexs Financial Advisor
Goldman, Sachs & Co., which we refer to as Goldman
Sachs, rendered its opinion to Centexs board of directors
that, as of April 7, 2009 and based upon and subject to the
factors and assumptions set forth therein, the exchange ratio of
0.975 shares of Pulte common stock to be paid for each
share of Centex common stock was fair from a financial point of
view to the holders of the outstanding shares of Centex common
stock.
The full text of the written opinion of Goldman Sachs, dated
April 7, 2009, which sets forth assumptions made,
procedures followed, matters considered and limitations on the
review undertaken in connection with the opinion, is attached to
this joint proxy statement/prospectus as Annex C. Goldman
Sachs provided its opinion for the information and assistance of
Centexs board of directors in connection with its
consideration of the transaction. The Goldman Sachs opinion is
not a recommendation as to how any holder of Centex common stock
should vote with respect to the transaction or any other matter.
Pursuant to an engagement letter between Centex and Goldman
Sachs, Centex has agreed to pay Goldman Sachs a transaction fee,
the principal portion of which is contingent upon completion of
the transaction.
Ownership
of Pulte After the Merger
In the merger, Pulte expects to issue approximately
128.1 million shares of Pulte common stock to Centex
stockholders, based on Centexs shares of common stock and
equity awards outstanding as of the Pulte record date, and
assuming that all of the equity awards outstanding as of such
date remain outstanding as of the date on which the merger is
completed. Immediately following the completion of the merger,
Centex stockholders are expected to own approximately 32.1% of
the shares of Pulte common stock outstanding. The merger will
have no effect on the number of shares of Pulte common stock
owned by existing Pulte shareholders.
Interests
of Pultes Directors and Executive Officers in the Merger
(see page 70)
Pulte believes that none of the executive officers and directors
of Pulte has interests in the merger that differ from, or are in
addition to, the interests of Pultes shareholders.
Interests
of Centexs Directors and Executive Officers in the Merger
(see page 70)
Centexs executive officers and directors have financial
interests in the merger that are different from, or in addition
to, their interests as Centex stockholders. Centexs board
of directors was aware of and considered these interests, among
other matters, in evaluating and negotiating the Merger
Agreement, and in recommending to the Centex stockholders that
they vote in favor of the proposal to approve the Merger
Agreement.
4
Certain equity compensation awards held by Centexs
executive officers and directors will vest in connection with
the merger, except that awards granted after execution of the
Merger Agreement will not vest upon completion of the merger,
although a portion of such awards will vest upon a subsequent
severance- qualifying termination. Based on Centex equity
compensation awards outstanding as of the Pulte record date, and
assuming that the merger is completed on August 18, 2009,
the executive officers and directors as a group, will vest in
502,168 stock options, and 3,478, 12,056, 716,734 and 295,973
deferred stock units, restricted stock units, shares of
restricted stock, and long-term performance units, respectively.
Assuming that immediately after the completion of the merger
each executive officers service with Centex is terminated
without cause, the executive officers as a group
will vest in an additional 82,617 shares of restricted
stock. Assuming that immediately after the completion of the
merger each executive officers service with Centex is
terminated without cause, the aggregate value of the
equity awards held by Centex executive officers and directors,
the vesting of which will have been accelerated by the merger or
by such termination, based on the closing price of Pulte common
stock (or Centex common stock, as applicable) as of
July 13, 2009, and valuing all stock options based on the
excess, if any, of fair market value of the underlying shares
over the exercise price, will be $8,781,844.
In addition, each of Centexs executive officers
participates in the Centex Corporation Plan Regarding Severance
After a Change in Control, which would provide severance and
other benefits in the case of qualifying terminations of
employment following a change in control, including the merger.
Based on compensation and benefit levels in effect on
July 13, 2009 and assuming the merger is completed on
August 18, 2009 and the employment of each executive
officer is terminated by Centex without cause or by
the executive for good reason immediately
thereafter, the executive officers as a group, will be entitled
to receive $11,701,738 in cash severance payments under the
Centex Corporation Plan Regarding Severance After a Change in
Control.
In addition, Centex maintains the 2003 Annual Incentive
Compensation Plan, which provides for the payment of a target
incentive compensation award to participants for the fiscal year
in which a change in control, such as the merger, occurs, upon
such change in control. Assuming that the merger is completed on
August 18, 2009, the executive officers of Centex who are
participants in the plan, as a group, will receive from Centex
$4,412,800 in respect of the payment of the target award
pursuant to the annual bonus plan in connection with the merger.
Also, Centex maintains the Centex Corporation Executive Deferred
Compensation Plan, which provides for the full vesting of
unvested deferred compensation awards upon a change in control,
such as the merger. Assuming that the merger is completed on
August 18, 2009, the value of the aggregate amounts held by
the executive officers of Centex who have balances under the
plan, as a group, that will vest equals $1,933,141.
Timothy R. Eller, chairman and chief executive officer of
Centex, has entered into a consulting agreement with Pulte
providing for certain payments and benefits to him upon
completion of the merger, and for Mr. Eller to serve as
vice chairman of the Pulte board of directors and as a
consultant to Pulte, in each case, for a period of two years
following the completion of the merger.
Management
and Board of Directors of Pulte After the Merger (see
page 70)
Upon completion of the merger, Richard J. Dugas, Jr.,
currently president and chief executive officer of Pulte, will
also assume the position of chairman of Pulte. Mr. Eller
will join the board of directors of Pulte as vice chairman and
will serve as a consultant to Pulte, in each case, for two years
following completion of the merger. The board of directors of
Pulte will be expanded to twelve directors and will include four
members of the current Centex board of directors, namely
Mr. Eller, Clint W. Murchison, III, James J. Postl and
Thomas M. Schoewe, and eight members of the current Pulte
board of directors, namely Pultes founder and current
chairman William J. Pulte, Mr. Dugas, Brian P. Anderson,
Cheryl W. Grisé, Debra J. Kelly-Ennis, David N. McCammon,
Patrick J. OLeary and Bernard W. Reznicek.
5
Listing
of Pulte Common Stock (see page 69) and Delisting and
Deregistration of Centex Common Stock (see
page 69)
Application will be made to have the shares of Pulte common
stock to be issued in the merger approved for listing on the
NYSE, where Pulte common stock currently is traded under the
symbol PHM. If the merger is completed, Centex
common stock will no longer be listed on the NYSE and will be
deregistered under the Securities Exchange Act of 1934, as
amended, which we refer to as the Exchange Act, and Centex will
no longer file periodic reports with the SEC.
Dissenters
Rights (see page 69)
Pulte
Under Michigan law, holders of Pulte common stock are not
entitled to dissenters rights in connection with the
proposal to approve the issuance of shares in the merger, the
proposal to approve the charter amendment to increase the number
of authorized shares of common stock or the proposal to approve
the charter amendment to change Pultes corporate name.
Centex
Under Nevada law, holders of Centex common stock are not
entitled to dissenters rights in connection with the
merger.
Conditions
to Completion of the Merger (see page 78)
A number of conditions to each partys obligation to
complete the merger must be satisfied before the merger will be
completed, including:
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the approval of the proposal to approve the Merger Agreement by
the holders of a majority of the outstanding shares of Centex
common stock;
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the approval of (1) the proposal to approve the charter
amendment to increase the number of authorized shares of common
stock by the holders of a majority of the outstanding shares of
Pulte common stock entitled to vote on this proposal and
(2) the proposal to approve the issuance of shares in the
merger by a majority of the votes cast on the proposal, provided
that the total votes cast on this proposal represent over 50% of
the outstanding shares of Pulte common stock entitled to vote on
this proposal;
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the absence of any temporary restraining order or preliminary or
permanent injunction issued by any court of competent
jurisdiction that prohibits or prevents the completion of the
merger;
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the expiration or termination of any applicable waiting period
under the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, which we refer to as the HSR
Act, which condition was satisfied upon expiration of the
applicable waiting period on May 22, 2009;
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the approval for listing on the NYSE of the shares of Pulte
common stock to be issued in the merger and to be reserved for
issuance in connection with the merger;
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the effectiveness under the Securities Act of 1933, as amended,
which we refer to as the Securities Act, of the registration
statement on Form
S-4 of which
this joint proxy statement/prospectus forms a part and the
absence of any stop order or proceedings initiated by the SEC
for that purpose;
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the accuracy and correctness of representations and warranties
of the other party, subject to certain qualifications described
in the Merger Agreement, and the receipt of a certificate from
the officers of the other party to that effect;
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the other partys having performed and complied with its
covenants in the Merger Agreement in all material respects prior
to the completion of the merger, and the receipt of a
certificate from the officers of the other party to that
effect; and
|
6
|
|
|
|
|
the receipt by each party of a tax opinion from its counsel that
the merger will be treated as a reorganization
within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended, which we refer to as the
Internal Revenue Code.
|
Some of the conditions set forth in the Merger Agreement may be
waived by Pulte or Centex, subject to the agreement of the other
party in specific cases. For a more detailed discussion of these
matters, see The Merger Agreement Conditions
to Completion of the Merger beginning on page 78.
Regulatory
Approvals (see page 65)
The merger was subject to review under the HSR Act by the United
States Federal Trade Commission, which we refer to as the FTC,
and the Antitrust Division of the United States Department of
Justice, which we refer to as the DOJ. The required
notifications were filed on April 21, 2009 by Centex and on
April 22, 2009 by Pulte, and the statutory waiting period
under the HSR Act expired on May 22, 2009 at
11:59 p.m., eastern time. No other regulatory approvals are
a condition to the completion of the merger.
Litigation
(see page 65)
Centex, its directors and Pulte are parties to multiple lawsuits
filed by third parties seeking monetary damages or injunctive
relief, or both, in connection with the Merger Agreement. Based
on the facts known to date, the defendants believe that the
claims asserted against them in these lawsuits are without
merit, and the defendants intend to defend themselves vigorously
against the claims.
No
Solicitation by Centex (see page 80)
Subject to certain exceptions, the Merger Agreement precludes
Centex from soliciting or engaging in discussions or
negotiations with a third party with respect to a proposal to
acquire a significant interest in Centexs equity or
assets. Notwithstanding such restrictions, the Merger Agreement
provides that, under specified circumstances occurring before
Centex stockholders approve the proposal to approve the Merger
Agreement, if Centex receives an unsolicited proposal from a
third party to acquire a significant interest in Centex that its
board of directors determines in good faith is reasonably likely
to lead to a proposal that is superior to the merger with Pulte,
Centex may furnish nonpublic information to that third party and
engage in negotiations regarding an acquisition proposal with
that third party.
Termination
of the Merger Agreement (see page 88)
The Merger Agreement may be terminated at any time prior to the
completion of the merger by the mutual written consent of Pulte
and Centex. Also, subject to certain qualifications and
exceptions, either Pulte or Centex may terminate the Merger
Agreement at any time prior to the completion of the merger if:
|
|
|
|
|
the merger does not occur on or before November 7, 2009;
|
|
|
|
a governmental entity permanently enjoins or otherwise prohibits
the completion of the merger;
|
|
|
|
the Centex special meeting concludes without the approval of the
proposal to approve the Merger Agreement by Centexs
stockholders; or
|
|
|
|
the Pulte special meeting concludes without the approval of the
proposal to approve the issuance of shares in the merger and the
proposal to approve the charter amendment to increase the number
of authorized shares of common stock by Pultes
shareholders.
|
Centex may terminate the Merger Agreement in light of a superior
proposal at any time prior to the approval of the proposal to
approve the Merger Agreement by Centexs stockholders if
(subject to certain qualifications and exceptions):
|
|
|
|
|
Centex is not in material breach of certain restrictions on its
ability to solicit alternative proposals, including its
obligation to notify Pulte of the superior proposal;
|
7
|
|
|
|
|
the superior proposal continues to constitute a superior
proposal three business days after Pulte is notified of the
superior proposal; and
|
|
|
|
the Centex board of directors determines that recommending that
Centex stockholders vote for the proposal to approve the Merger
Agreement, or failing to change such recommendation, would be
inconsistent with its fiduciary obligations.
|
In addition, Centex may terminate the Merger Agreement at any
time prior to the completion of the merger if (subject to
certain qualifications and exceptions):
|
|
|
|
|
Pulte breaches or fails to perform in any material respect any
of its representations, warranties, covenants or other
agreements, which breach or failure to perform would result in a
failure of any of the conditions to Centexs obligation to
complete the merger; or
|
|
|
|
Pultes board of directors changes its recommendation that
Pultes shareholders approve the proposal to approve the
charter amendment to increase the number of authorized shares of
common stock and the proposal to approve the issuance of shares
in the merger.
|
Pulte may terminate the Merger Agreement at any time prior to
the completion of the merger if (subject to certain
qualifications and exceptions):
|
|
|
|
|
Centex breaches or fails to perform in any material respect any
of its representations, warranties, covenants or other
agreements, which breach or failure to perform would result in a
failure of any of the conditions to Pultes obligation to
complete the merger; or
|
|
|
|
the Centex board of directors changes its recommendation that
Centexs stockholders approve the proposal to approve the
Merger Agreement, or recommends the approval or adoption of any
alternative proposal to Centexs stockholders.
|
Termination
Fees (see page 89)
If the Merger Agreement is terminated, Centex may be required in
specified circumstances to pay a termination fee of
$24 million or $48 million to Pulte, and Pulte may be
required in specified circumstances to pay a termination fee of
$51 million or $102 million to Centex.
Material
United States Federal Income Tax Consequences (see
page 67)
The merger is intended to qualify as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code. It
is a condition to the completion of the merger that Pulte and
Centex each receives a written opinion from its counsel, dated
as of the date of completion of the merger, to the effect that
the merger will be treated as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code. In
addition, in connection with the filing of the registration
statement of which this joint proxy statement/prospectus is a
part, each of Pulte and Centex has received a legal opinion to
the same effect. Accordingly, holders of Centex common stock
whose shares of Centex common stock are exchanged in the merger
for shares of Pulte common stock generally will not recognize
gain or loss for U.S. federal income tax purposes, except
with respect to any cash received in lieu of fractional shares
of Pulte common stock.
Tax matters are complicated, and the tax consequences of the
merger to each Centex stockholder will depend on such
stockholders particular facts and circumstances.
Centex stockholders should consult their tax advisors with
respect to the federal, state and other tax consequences to them
of the merger.
Accounting
Treatment (see page 69)
Pulte will account for the acquisition of shares of Centex
common stock through the merger under the acquisition method of
accounting for business combinations. In determining the
acquirer for accounting purposes, Pulte considered the factors
required under Statement of Financial Accounting Standards
No. 141 (revised), Business Combinations, which we
refer to as SFAS 141(R), and determined that Pulte will be
considered the acquirer of Centex for accounting purposes.
8
Risk
Factors (see page 19)
In evaluating the merger, the Merger Agreement or the issuance
of shares of Pulte common stock in the merger, you should
carefully read this joint proxy statement/prospectus and
especially consider the factors discussed in the section
entitled Risk Factors beginning on page 19.
Dividend
Policies
Pulte
The holders of Pulte common stock receive dividends if and when
declared by the Pulte board of directors. On November 24,
2008, Pulte discontinued its regular quarterly dividend
effective in the first quarter of 2009. Due to the ongoing
difficult business conditions and Pultes expectation that
such conditions will continue for at least the near term, Pulte
does not anticipate paying dividends on its common stock in the
foreseeable future. Pursuant to the Merger Agreement, Pulte has
agreed that, except in the ordinary course of business, it will
not authorize or declare any dividend on or make any
distribution with respect to any shares of its capital stock
prior to the completion of the merger.
Centex
The holders of Centex common stock receive dividends if and when
declared by the Centex board of directors. Centex suspended its
regular quarterly dividend on October 9, 2008. Pursuant to
the Merger Agreement, Centex has agreed that it will not
authorize or declare any dividend on or make any distribution
with respect to any shares of its capital stock prior to the
completion of the merger.
Comparison
of Stockholder Rights and Corporate Governance Matters (see
page 125)
Centex stockholders receiving the merger consideration will have
different rights once they become Pulte shareholders due to
differences between the governing documents of Pulte and Centex
and between Michigan and Nevada law. In particular:
|
|
|
|
|
Centexs stockholders may amend Centexs by-laws with
the affirmative vote of stockholders holding
662/3%
or more of the voting power, whereas Pulte stockholders may
amend Pultes by-laws with the approval of a majority of
the votes cast;
|
|
|
|
A Centex stockholder that intends to nominate a director or
bring business before an annual meeting must comply with certain
advance notice requirements, whereas a Pulte shareholder is only
required to do so if he or she intends to nominate a director;
|
|
|
|
Nevada law, to which Centex is subject, limits the voting rights
of shares acquired by certain stockholders that acquire more
than twenty percent of a corporations shares, whereas
Michigan law, to which Pulte is subject, does not provide for
such a restriction;
|
|
|
|
To preserve Pultes net operating loss carryforwards and
other tax benefits, Pultes by-laws provide for certain
transfer restrictions on Pultes common stock, whereas
neither Centexs articles of incorporation nor by-laws
provide for any transfer restrictions to preserve Centexs
net operating loss carryforwards and other tax benefits; and
|
|
|
|
Pultes Restated Articles of Incorporation and by-laws
permit shareholder action by written consent if signed by the
requisite number of holders, whereas Centexs articles of
incorporation and by-laws generally prohibit stockholder action
by written consent, subject to certain limited exceptions.
|
These and certain other differences are described in detail
under Comparison of Stockholder Rights and Corporate
Governance Matters beginning on page 125.
Fees and
Expenses (see page 91)
Generally, all fees and expenses incurred in connection with the
Merger Agreement and the transactions contemplated by the Merger
Agreement will be paid by the party incurring those expenses,
subject to the specific exceptions discussed in this joint proxy
statement/prospectus.
9
Summary
Selected Historical Financial Data for Pulte
The following tables set forth the selected historical
consolidated financial and operating data for Pulte. The
selected consolidated financial and operating data as of and for
the fiscal years ended December 31, 2008, 2007, 2006, 2005
and 2004 have been derived from Pultes audited
consolidated financial statements, which are incorporated by
reference into this joint proxy statement/prospectus. The
selected consolidated financial and operating data as of and for
the three months ended March 31, 2009 and 2008 have been
derived from Pultes unaudited condensed consolidated
financial statements, which are incorporated by reference into
this joint proxy statement/prospectus. The results for the three
months ended March 31, 2009 and 2008 are not necessarily
indicative of the results that may be expected for the entire
fiscal year. Pultes unaudited interim financial statements
reflect all adjustments that management of Pulte considers
necessary for fair presentation of the financial position and
results of operations for such periods in accordance with United
States generally accepted accounting principles, which we refer
to as GAAP. Historical results are not necessarily indicative of
the results that may be expected for any future period.
This selected consolidated financial and operating data should
be read in conjunction with Pultes Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008 and
Pultes Quarterly Report on
Form 10-Q
for the quarterly period ended March 31, 2009. See
Additional Information Where You Can Find More
Information beginning on page 134.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, (1)
|
|
|
Year Ended December 31, (1)
|
|
|
|
2009
|
|
|
2008
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
|
(Dollars in thousands, except per share data)
|
|
|
OPERATING DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
565,343
|
|
|
$
|
1,398,109
|
|
|
$
|
6,112,038
|
|
|
$
|
9,121,730
|
|
|
$
|
14,075,248
|
|
|
$
|
14,528,236
|
|
|
$
|
11,400,008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
$
|
(507,433
|
)
|
|
$
|
(705,130
|
)
|
|
$
|
(1,694,711
|
)
|
|
$
|
(2,509,492
|
)
|
|
$
|
1,010,368
|
|
|
$
|
2,298,822
|
|
|
$
|
1,635,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Services:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
18,549
|
|
|
$
|
43,488
|
|
|
$
|
151,016
|
|
|
$
|
134,769
|
|
|
$
|
194,596
|
|
|
$
|
161,414
|
|
|
$
|
112,719
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
$
|
(748
|
)
|
|
$
|
15,044
|
|
|
$
|
28,045
|
|
|
$
|
42,980
|
|
|
$
|
115,460
|
|
|
$
|
70,586
|
|
|
$
|
47,429
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other non-operating:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
3,528
|
|
|
$
|
7,222
|
|
|
$
|
26,404
|
|
|
$
|
6,595
|
|
|
$
|
4,564
|
|
|
$
|
4,885
|
|
|
$
|
1,749
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
$
|
(4,065
|
)
|
|
$
|
(2,970
|
)
|
|
$
|
(15,933
|
)
|
|
$
|
(30,391
|
)
|
|
$
|
(43,100
|
)
|
|
$
|
(92,394
|
)
|
|
$
|
(90,685
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
587,420
|
|
|
$
|
1,448,819
|
|
|
$
|
6,289,458
|
|
|
$
|
9,263,094
|
|
|
$
|
14,274,408
|
|
|
$
|
14,694,535
|
|
|
$
|
11,514,476
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes
|
|
$
|
(512,246
|
)
|
|
$
|
(693,056
|
)
|
|
$
|
(1,682,599
|
)
|
|
$
|
(2,496,903
|
)
|
|
$
|
1,082,728
|
|
|
$
|
2,277,014
|
|
|
$
|
1,592,324
|
|
Income taxes (benefit)
|
|
|
2,572
|
|
|
|
3,088
|
|
|
|
(209,486
|
)
|
|
|
(222,486
|
)
|
|
|
393,082
|
|
|
|
840,126
|
|
|
|
598,751
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
|
(514,818
|
)
|
|
|
(696,144
|
)
|
|
|
(1,473,113
|
)
|
|
|
(2,274,417
|
)
|
|
|
689,646
|
|
|
|
1,436,888
|
|
|
|
993,573
|
|
Income (loss) from discontinued operations(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,662
|
|
|
|
(2,175
|
)
|
|
|
55,025
|
|
|
|
(7,032
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(514,818
|
)
|
|
$
|
(696,144
|
)
|
|
$
|
(1,473,113
|
)
|
|
$
|
(2,255,755
|
)
|
|
$
|
687,471
|
|
|
$
|
1,491,913
|
|
|
$
|
986,541
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Income (loss) from discontinued operations is comprised of
Pultes former thrift operation and Argentina and Mexico
homebuilding operations which have been presented as
discontinued operations for all periods presented. |
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, (1)
|
|
|
Year Ended December 31, (1)
|
|
|
|
2009
|
|
|
2008
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
|
(Dollars in thousands, except per share data)
|
|
|
PER SHARE DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
(2.02
|
)
|
|
$
|
(2.75
|
)
|
|
$
|
(5.81
|
)
|
|
$
|
(9.02
|
)
|
|
$
|
2.73
|
|
|
$
|
5.62
|
|
|
$
|
3.93
|
|
Income (loss) from discontinued operations(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.07
|
|
|
|
(0.01
|
)
|
|
|
0.22
|
|
|
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(2.02
|
)
|
|
$
|
(2.75
|
)
|
|
$
|
(5.81
|
)
|
|
$
|
(8.94
|
)
|
|
$
|
2.73
|
|
|
$
|
5.84
|
|
|
$
|
3.91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding (000s omitted)
|
|
|
254,578
|
|
|
|
253,166
|
|
|
|
253,512
|
|
|
|
252,192
|
|
|
|
252,200
|
|
|
|
255,492
|
|
|
|
252,590
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share assuming dilution:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
(2.02
|
)
|
|
$
|
(2.75
|
)
|
|
$
|
(5.81
|
)
|
|
$
|
(9.02
|
)
|
|
$
|
2.67
|
|
|
$
|
5.47
|
|
|
$
|
3.82
|
|
Income (loss) from discontinued operations(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.07
|
|
|
|
(0.01
|
)
|
|
|
0.21
|
|
|
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(2.02
|
)
|
|
$
|
(2.75
|
)
|
|
$
|
(5.81
|
)
|
|
$
|
(8.94
|
)
|
|
$
|
2.66
|
|
|
$
|
5.68
|
|
|
$
|
3.79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding and effect of diluted
securities (000s omitted)
|
|
|
254,578
|
|
|
|
253,166
|
|
|
|
253,512
|
|
|
|
252,192
|
|
|
|
258,621
|
|
|
|
262,801
|
|
|
|
260,234
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity
|
|
$
|
9.00
|
|
|
$
|
14.08
|
|
|
$
|
10.98
|
|
|
$
|
16.80
|
|
|
$
|
25.76
|
|
|
$
|
23.18
|
|
|
$
|
17.68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared(2)
|
|
$
|
|
|
|
$
|
0.04
|
|
|
$
|
0.16
|
|
|
$
|
0.16
|
|
|
$
|
0.16
|
|
|
$
|
0.13
|
|
|
$
|
0.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Income (loss) from discontinued operations is comprised of
Pultes former thrift operation and Argentina and Mexico
homebuilding operations which have been presented as
discontinued operations for all periods presented. |
|
(2) |
|
On November 24, 2008, Pulte discontinued the regular
quarterly dividend on Pultes common stock effective in the
first quarter of 2009. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
|
(Dollars in thousands)
|
|
|
BALANCE SHEET DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
House and land inventory
|
|
$
|
3,854,041
|
|
|
$
|
6,179,847
|
|
|
$
|
4,201,289
|
|
|
$
|
6,835,945
|
|
|
$
|
9,374,335
|
|
|
$
|
8,756,093
|
|
|
$
|
7,241,350
|
|
Total assets
|
|
$
|
6,814,933
|
|
|
$
|
9,047,124
|
|
|
$
|
7,708,458
|
|
|
$
|
10,225,703
|
|
|
$
|
13,176,874
|
|
|
$
|
13,060,860
|
|
|
$
|
10,406,897
|
|
Senior notes
|
|
$
|
3,166,612
|
|
|
$
|
3,478,577
|
|
|
$
|
3,166,305
|
|
|
$
|
3,478,230
|
|
|
$
|
3,537,947
|
|
|
$
|
3,386,527
|
|
|
$
|
2,861,550
|
|
Shareholders equity
|
|
$
|
2,327,787
|
|
|
$
|
3,624,382
|
|
|
$
|
2,835,698
|
|
|
$
|
4,320,193
|
|
|
$
|
6,577,361
|
|
|
$
|
5,957,342
|
|
|
$
|
4,522,274
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
Year Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
OTHER DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total markets, at balance sheet date
|
|
|
48
|
|
|
|
51
|
|
|
|
49
|
|
|
|
51
|
|
|
|
52
|
|
|
|
54
|
|
|
|
45
|
|
Total settlements units
|
|
|
2,147
|
|
|
|
4,733
|
|
|
|
21,022
|
|
|
|
27,540
|
|
|
|
41,487
|
|
|
|
45,630
|
|
|
|
38,612
|
|
Total net new orders units
|
|
|
3,022
|
|
|
|
5,402
|
|
|
|
15,306
|
|
|
|
25,175
|
|
|
|
33,925
|
|
|
|
47,531
|
|
|
|
40,576
|
|
Backlog units, at balance sheet date
|
|
|
3,049
|
|
|
|
8,559
|
|
|
|
2,174
|
|
|
|
7,890
|
|
|
|
10,255
|
|
|
|
17,817
|
|
|
|
15,916
|
|
Average unit selling price
|
|
$
|
263,000
|
|
|
$
|
295,000
|
|
|
$
|
284,000
|
|
|
$
|
322,000
|
|
|
$
|
337,000
|
|
|
$
|
315,000
|
|
|
$
|
287,000
|
|
Gross profit margin from home sales(1)
|
|
|
(59.0
|
)%
|
|
|
(32.1
|
)%
|
|
|
(10.1
|
)%
|
|
|
(5.0
|
)%
|
|
|
17.4
|
%
|
|
|
23.4
|
%
|
|
|
22.6
|
%
|
|
|
|
(1) |
|
Homebuilding interest expense, which represents the amortization
of capitalized interest, and land and community valuation
adjustments are included in homebuilding cost of sales. |
12
Summary
Selected Historical Financial Data for Centex
The following table sets forth the selected historical
consolidated financial and operating data for Centex. The
selected consolidated financial and operating data as of and for
the fiscal years ended March 31, 2009, 2008, 2007, 2006 and
2005 have been derived from Centexs audited consolidated
financial statements, which are incorporated by reference into
this joint proxy statement/prospectus. Historical results are
not necessarily indicative of the results that may be expected
for any future period.
This selected consolidated financial and operating data should
be read in conjunction with Centexs Annual Report on
Form 10-K
for the fiscal year ended March 31, 2009. See
Additional Information Where You Can Find More
Information beginning on page 134.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended March 31, (1)
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(Dollars in thousands, except per share data)
|
|
|
Revenues
|
|
$
|
3,826,530
|
|
|
$
|
8,275,562
|
|
|
$
|
11,887,601
|
|
|
$
|
12,742,666
|
|
|
$
|
9,842,700
|
|
Earnings (Loss) from Continuing Operations
|
|
$
|
(1,440,151
|
)
|
|
$
|
(2,660,968
|
)
|
|
$
|
(9,477
|
)
|
|
$
|
1,212,665
|
|
|
$
|
898,571
|
|
Net Earnings (Loss)
|
|
$
|
(1,388,754
|
)
|
|
$
|
(2,657,482
|
)
|
|
$
|
268,366
|
|
|
$
|
1,289,313
|
|
|
$
|
1,011,364
|
|
Shareholders Equity
|
|
$
|
917,814
|
|
|
$
|
2,298,661
|
|
|
$
|
5,112,269
|
|
|
$
|
5,011,658
|
|
|
$
|
4,280,757
|
|
Total Assets
|
|
$
|
5,918,114
|
|
|
$
|
8,137,332
|
|
|
$
|
13,199,933
|
|
|
$
|
21,364,999
|
|
|
$
|
20,011,163
|
|
Total Debt
|
|
$
|
3,223,924
|
|
|
$
|
3,662,220
|
|
|
$
|
5,565,157
|
|
|
$
|
6,055,197
|
|
|
$
|
4,799,365
|
|
Per Common Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss) from Continuing Operations Per Share
Basic
|
|
$
|
(11.58
|
)
|
|
$
|
(21.71
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
9.56
|
|
|
$
|
7.18
|
|
Earnings (Loss) from Continuing Operations Per Share
Diluted
|
|
$
|
(11.58
|
)
|
|
$
|
(21.71
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
9.13
|
|
|
$
|
6.79
|
|
Net Earnings (Loss) Per Share Basic
|
|
$
|
(11.17
|
)
|
|
$
|
(21.68
|
)
|
|
$
|
2.23
|
|
|
$
|
10.16
|
|
|
$
|
8.08
|
|
Net Earnings (Loss) Per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
(11.17
|
)
|
|
$
|
(21.68
|
)
|
|
$
|
2.23
|
|
|
$
|
9.71
|
|
|
$
|
7.64
|
|
Cash Dividends(2)
|
|
$
|
0.08
|
|
|
$
|
0.16
|
|
|
$
|
0.16
|
|
|
$
|
0.16
|
|
|
$
|
0.16
|
|
Book Value Per Share Based on Shares Outstanding at Balance
Sheet Date
|
|
$
|
7.38
|
|
|
$
|
18.65
|
|
|
$
|
42.61
|
|
|
$
|
41.04
|
|
|
$
|
33.51
|
|
Average Shares Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
124,308,846
|
|
|
|
122,577,071
|
|
|
|
120,537,235
|
|
|
|
126,870,887
|
|
|
|
125,226,596
|
|
Diluted
|
|
|
124,308,846
|
|
|
|
122,577,071
|
|
|
|
120,537,235
|
|
|
|
132,749,797
|
|
|
|
132,397,961
|
|
|
|
|
(1) |
|
The selected financial data presented in this table have been
derived from Centexs audited annual financial statements
and adjusted to reflect Centexs home services operations
(sold in April 2008), Construction Services (sold in March
2007), Home Equity (sold in July 2006), and International
Homebuilding (sold in September 2005) as discontinued
operations. |
|
(2) |
|
On October 9, 2008, Centex announced the discontinuation of
the regular quarterly dividend on Centexs common stock. |
13
Selected
Unaudited Pro Forma Condensed Combined Financial
Information
The following selected unaudited pro forma condensed combined
statement of operations data for the three months ended
March 31, 2009 and year ended December 31, 2008
reflect the merger and related transactions as if they had
occurred on January 1, 2008. The following unaudited pro
forma condensed combined balance sheet data as of March 31,
2009 reflect the merger and related transactions as if they had
occurred on March 31, 2009.
Such unaudited pro forma condensed combined financial data is
based on the historical financial statements of Pulte and Centex
and on publicly available information and certain assumptions
and adjustments as discussed in the section entitled
Unaudited Pro Forma Condensed Combined Financial
Statements beginning on page 95, including
assumptions relating to the allocation of the consideration paid
for the assets and liabilities of Centex based on preliminary
estimates of their fair value. This unaudited pro forma
condensed combined financial information is provided for
illustrative purposes only and is not necessarily indicative of
what the operating results or financial position of Pulte or
Centex would have been had the merger and related transactions
been completed at the beginning of the periods or on the dates
indicated, nor are they necessarily indicative of any future
operating results or financial position. Pulte and Centex may
have performed differently had they been combined during the
periods presented. The following should be read in connection
with the section of this joint proxy statement/prospectus
entitled Unaudited Pro Forma Condensed Combined Financial
Statements beginning on page 95 and other information
included in or incorporated by reference into this joint proxy
statement/prospectus.
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
|
For the Year Ended
|
|
|
|
Ended March 31,
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(Dollars in thousands, except per share data)
|
|
|
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
1,414,235
|
|
|
$
|
11,623,171
|
|
Expenses
|
|
|
2,382,894
|
|
|
|
15,271,894
|
|
Equity loss
|
|
|
(40,078
|
)
|
|
|
(123,977
|
)
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations before income taxes
|
|
|
(1,008,737
|
)
|
|
|
(3,772,700
|
)
|
Income taxes (benefit)
|
|
|
(63,031
|
)
|
|
|
(255,374
|
)
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
$
|
(945,706
|
)
|
|
$
|
(3,517,326
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
|
For the Year Ended
|
|
|
|
Ended March 31,
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
Share and Per Share Data:
|
|
|
|
|
|
|
|
|
Net loss per share
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(2.51
|
)
|
|
$
|
(9.37
|
)
|
Diluted
|
|
$
|
(2.51
|
)
|
|
$
|
(9.37
|
)
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
|
Basic
|
|
|
376,276,000
|
|
|
|
375,214,000
|
|
Diluted
|
|
|
376,276,000
|
|
|
|
375,214,000
|
|
14
|
|
|
|
|
|
|
As of March 31,
|
|
|
|
2009
|
|
|
|
(Dollars in thousands,
|
|
|
|
except per share data)
|
|
|
Balance Sheet Data:
|
|
|
|
|
Cash and equivalents
|
|
$
|
3,455,213
|
|
House and land inventory
|
|
$
|
6,544,026
|
|
Total assets
|
|
$
|
12,449,359
|
|
Senior notes
|
|
$
|
5,769,300
|
|
Shareholders equity
|
|
$
|
3,394,103
|
|
Book value per common share outstanding
|
|
$
|
8.93
|
(1)
|
|
|
|
(1) |
|
Book value per common share outstanding was calculated as
shareholders equity divided by the sum of the
258,563,448 shares of Pulte common stock outstanding at
March 31, 2009 and the 121,698,000 pro forma shares of
Pulte common stock estimated to be issued in connection with the
merger. |
15
Unaudited
Pro Forma Combined Per Share Information
The following selected unaudited pro forma combined per share
information for the three months ended March 31, 2009 and
the year ended December 31, 2008 reflects the merger and
related transactions as if they had occurred on January 1,
2008. The unaudited pro forma combined book value per common
share outstanding reflects the merger and related transactions
as if they had occurred on March 31, 2009.
Such unaudited pro forma combined per share information is based
on the historical financial statements of Pulte and Centex and
on publicly available information and certain assumptions and
adjustments as discussed in the section entitled Unaudited
Pro Forma Condensed Combined Financial Statements
beginning on page 95, including assumptions relating to the
allocation of the consideration paid for the assets and
liabilities of Centex based on preliminary estimates of their
fair value. This unaudited pro forma combined per share
information is provided for illustrative purposes only and is
not necessarily indicative of what the operating results or
financial position of Pulte or Centex would have been had the
merger and related transactions been completed at the beginning
of the periods or on the dates indicated, nor are they
necessarily indicative of any future operating results or
financial position. Pulte and Centex may have performed
differently had they been combined during the periods presented.
The following should be read in connection with the section
entitled Unaudited Pro Forma Condensed Combined Financial
Statements beginning on page 95, and other
information included in or incorporated by reference into this
joint proxy statement/prospectus.
|
|
|
|
|
|
|
|
|
|
|
For the Three
|
|
|
|
|
|
|
Months Ended
|
|
|
For the Year Ended
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
Unaudited pro forma combined:
|
|
|
|
|
|
|
|
|
Net loss per share attributable to Pulte
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(2.51
|
)
|
|
$
|
(9.37
|
)
|
Diluted
|
|
$
|
(2.51
|
)
|
|
$
|
(9.37
|
)
|
Dividends declared per common share
|
|
$
|
|
(2)
|
|
$
|
0.16
|
(2)
|
Book value per common share
|
|
$
|
8.93
|
(1)
|
|
|
|
|
Unaudited pro forma Centex equivalent(4):
|
|
|
|
|
|
|
|
|
Net loss per share of Centex common stock exchanged
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(2.45
|
)
|
|
$
|
(9.14
|
)
|
Diluted
|
|
$
|
(2.45
|
)
|
|
$
|
(9.14
|
)
|
Dividends declared per common share of Centex stock exchanged
|
|
$
|
|
(2)
|
|
$
|
0.16
|
(2)
|
Book value per common share of Centex stock exchanged
|
|
$
|
8.70
|
|
|
|
|
|
Pulte historical data:
|
|
|
|
|
|
|
|
|
Loss per share from continuing operations:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(2.02
|
)
|
|
$
|
(5.81
|
)
|
Diluted
|
|
$
|
(2.02
|
)
|
|
$
|
(5.81
|
)
|
Dividends declared per common share
|
|
$
|
|
(2)
|
|
$
|
0.16
|
(2)
|
Book value per common share
|
|
$
|
9.00
|
|
|
|
|
|
Centex historical data:
|
|
|
|
|
|
|
|
|
Loss per share from continuing operations:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(3.26
|
)
|
|
$
|
(15.65
|
)
|
Diluted
|
|
$
|
(3.26
|
)
|
|
$
|
(15.65
|
)
|
Dividends declared per common share
|
|
$
|
|
(3)
|
|
$
|
0.08
|
(3)
|
Book value per common share
|
|
$
|
7.38
|
|
|
|
|
|
|
|
|
(1)
|
|
Book value per common share
outstanding was calculated as shareholders equity divided
by the sum of the 258,563,448 shares of Pulte common stock
outstanding at March 31, 2009 and the 121,698,000 pro forma
shares of Pulte common stock estimated to be issued in
connection with the merger.
|
|
(2)
|
|
On November 24, 2008, Pulte
discontinued the regular quarterly dividend on Pultes
common stock effective in the first quarter of 2009. Due to the
ongoing difficult business conditions and Pultes
expectation that such conditions will continue for at least the
near term, Pulte does not anticipate paying dividends on its
common stock in the foreseeable future.
|
|
(3)
|
|
On October 9, 2008, Centex
announced the discontinuation of the regular quarterly dividend
on Centexs common stock.
|
|
(4)
|
|
The pro forma Centex equivalent per
share information is computed by multiplying the pro forma
combined per share amounts by the 0.975 per share exchange ratio
to provide per share information for each share of Centex common
stock.
|
16
Comparative
Per Share Market Price Data
Pulte common stock trades on the NYSE under the symbol
PHM. Centex common stock trades on the NYSE under
the symbol CTX. The table below sets forth, for the
periods indicated, cash dividends paid per share of Pulte and
Centex common stock and the range of high and low per share
sales prices for Pulte and Centex common stock as reported on
the NYSE. For current price information, you should consult
publicly available sources. For more information on Pulte and
Centex payment of dividends, see Dividend
Policies beginning on page 9.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pulte Common Stock
|
|
|
|
High
|
|
|
Low
|
|
|
Dividends Paid
|
|
|
Calendar Year 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
First quarter
|
|
$
|
35.56
|
|
|
$
|
25.51
|
|
|
$
|
0.04
|
|
Second quarter
|
|
$
|
29.40
|
|
|
$
|
22.26
|
|
|
$
|
0.04
|
|
Third quarter
|
|
$
|
24.25
|
|
|
$
|
12.88
|
|
|
$
|
0.04
|
|
Fourth quarter
|
|
$
|
16.99
|
|
|
$
|
8.78
|
|
|
$
|
0.04
|
|
Calendar Year 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
First quarter
|
|
$
|
16.63
|
|
|
$
|
8.20
|
|
|
$
|
0.04
|
|
Second quarter
|
|
$
|
16.81
|
|
|
$
|
9.57
|
|
|
$
|
0.04
|
|
Third quarter
|
|
$
|
17.32
|
|
|
$
|
8.32
|
|
|
$
|
0.04
|
|
Fourth quarter
|
|
$
|
15.38
|
|
|
$
|
6.49
|
|
|
$
|
0.04
|
|
Calendar Year 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
First quarter
|
|
$
|
12.90
|
|
|
$
|
7.71
|
|
|
|
|
|
Second quarter
|
|
$
|
12.45
|
|
|
$
|
8.30
|
|
|
|
|
|
Third quarter (through July 17, 2009)
|
|
$
|
9.34
|
|
|
$
|
7.84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Centex Common Stock
|
|
|
|
High
|
|
|
Low
|
|
|
Dividends Paid
|
|
|
Calendar Year 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
First quarter
|
|
$
|
56.45
|
|
|
$
|
40.41
|
|
|
$
|
0.04
|
|
Second quarter
|
|
$
|
49.85
|
|
|
$
|
39.59
|
|
|
$
|
0.04
|
|
Third quarter
|
|
$
|
44.23
|
|
|
$
|
24.55
|
|
|
$
|
0.04
|
|
Fourth quarter
|
|
$
|
30.75
|
|
|
$
|
17.77
|
|
|
$
|
0.04
|
|
Calendar Year 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
First quarter
|
|
$
|
30.29
|
|
|
$
|
18.17
|
|
|
$
|
0.04
|
|
Second quarter
|
|
$
|
27.72
|
|
|
$
|
13.33
|
|
|
$
|
0.04
|
|
Third quarter
|
|
$
|
18.71
|
|
|
$
|
10.91
|
|
|
$
|
0.04
|
|
Fourth quarter
|
|
$
|
17.16
|
|
|
$
|
4.91
|
|
|
|
|
|
Calendar Year 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
First quarter
|
|
$
|
12.49
|
|
|
$
|
5.03
|
|
|
|
|
|
Second quarter
|
|
$
|
11.95
|
|
|
$
|
7.06
|
|
|
|
|
|
Third quarter (through July 17, 2009)
|
|
$
|
9.08
|
|
|
$
|
7.54
|
|
|
|
|
|
The following table presents the last reported sale price of a
share of Pulte common stock, as reported on the NYSE, the last
reported sale price of a share of Centex common stock, as
reported on the NYSE, and the equivalent value of the merger
consideration per share of Centex common stock, in each case, on
April 7, 2009, the last full trading day prior to the
public announcement of the proposed merger, and on July 17,
2009,
17
the last trading day prior to the printing of this joint proxy
statement/prospectus for which it was practicable to include
this information.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of Merger
|
|
|
|
|
|
|
|
|
|
Consideration
|
|
|
|
Pulte
|
|
|
Centex
|
|
|
Per Share of Centex
|
|
Date
|
|
Common Stock
|
|
|
Common Stock
|
|
|
Common Stock(1)
|
|
|
April 7, 2009
|
|
$
|
10.77
|
|
|
$
|
7.62
|
|
|
$
|
10.50
|
|
July 17, 2009
|
|
$
|
9.14
|
|
|
$
|
8.84
|
|
|
$
|
8.91
|
|
|
|
|
(1) |
|
Calculated by multiplying the last reported sale price of Pulte
common stock by the 0.975 per share exchange ratio. |
The market value of the shares of Pulte common stock to be
issued in exchange for shares of Centex common stock upon the
completion of the merger will not be known at the time Centex
stockholders vote on the proposal to approve the Merger
Agreement or at the time Pulte shareholders vote on the proposal
to approve the issuance of shares in the merger and the proposal
to approve the charter amendment to increase the number of
authorized shares of common stock. The exchange ratio is fixed
and will not be adjusted for changes in the stock prices of
either company before the merger is completed.
The above tables show historical stock price comparisons and the
equivalent value of the merger consideration per share of Centex
common stock. Because the market prices of Pulte common stock
and Centex common stock will likely fluctuate prior to the
merger, these comparisons may not provide meaningful information
to Pulte shareholders in determining whether to approve the
proposal to approve the issuance of shares in the merger or the
proposal to approve the charter amendment to increase the number
of authorized shares of common stock, or to Centex stockholders
in determining whether to approve the proposal to approve the
Merger Agreement. Pulte shareholders and Centex stockholders are
encouraged to obtain current market quotations for Pulte and
Centex common stock and to review carefully the other
information contained in this joint proxy statement/prospectus
or incorporated by reference into this joint proxy
statement/prospectus in considering whether to approve the
proposals before them. See Additional
Information Where You Can Find More
Information beginning on page 134.
18
RISK
FACTORS
The merger involves risks for Pulte shareholders and Centex
stockholders. Centex stockholders will be choosing to invest in
Pulte common stock by voting in favor of the proposal to approve
the Merger Agreement. Pulte shareholders will be choosing to
permit significant dilution of their percentage ownership in
Pulte by voting in favor of the proposal to approve the issuance
of shares in the merger and to authorize potential further
dilution of their percentage ownership in Pulte by voting in
favor of the proposal to approve the charter amendment to
increase the number of authorized shares of common stock. In
addition to the other information included in this joint proxy
statement/prospectus, including the matters addressed in
Cautionary Statement Concerning Forward-Looking
Statements beginning on page 26, you should carefully
consider the following risks before deciding whether to vote for
approval of the proposal to approve the Merger Agreement, in the
case of Centex stockholders, or for approval of the proposal to
approve the issuance of shares in the merger and the proposal to
approve the charter amendment to increase the number of
authorized shares of common stock, in the case of Pulte
shareholders. You should also read and consider the risks
associated with each of the businesses of Pulte and Centex that
are incorporated by reference into this joint proxy
statement/prospectus because these risks may also affect the
combined company. These risks can be found in the Pulte Annual
Report on
Form 10-K
for the fiscal year ended December 31, 2008 and the Centex
Annual Report on
Form 10-K
for the fiscal year ended March 31, 2009, which are filed
with the SEC and incorporated by reference into this joint proxy
statement/prospectus. You should also read and consider the
other information in this joint proxy statement/prospectus and
the other documents incorporated by reference into this joint
proxy statement/prospectus. See Additional
Information Where You Can Find More
Information beginning on page 134.
Risks
Relating to the Merger
The
combined company will have more indebtedness after the merger,
which could adversely affect its cash flows and
business.
As of March 31, 2009, the principal amount of Pultes
outstanding long-term debt was approximately $3.2 billion
and its debt service obligations, comprised of scheduled
maturities of principal and interest, during the next twelve
months was approximately $234 million. Assuming the merger
had been completed on March 31, 2009, the principal amount
of the combined companys outstanding debt as of
March 31, 2009 would have been approximately
$6.3 billion and, based on assumed interest rates, leverage
ratios and credit ratings, the combined companys debt
service obligations, comprised of scheduled maturities of
principal and interest, during the next twelve months, in the
absence of any other transactions, would have been approximately
$627 million. As a result of this increase in debt, demands
on the combined companys cash resources will increase
after the completion of the merger. As of March 31, 2009,
Pulte and Centex had combined cash on hand of approximately
$3.5 billion. The increased levels of debt could, among
other things:
|
|
|
|
|
require the combined company to dedicate a substantial portion
of its cash on hand and cash flow from operations to the
servicing and repayment of its debt, thereby reducing funds
available for working capital, capital expenditures, dividends,
acquisitions and other purposes;
|
|
|
|
make it more difficult for the combined company to maintain
compliance with certain financial covenants in its credit
facilities;
|
|
|
|
increase the combined companys vulnerability to, and limit
flexibility in planning for, adverse economic and industry
conditions;
|
|
|
|
adversely affect the combined companys credit rating, with
the result that the combined company may have an increased cost
of borrowing and its ability to obtain surety bonds could be
impaired;
|
|
|
|
limit the combined companys ability to obtain additional
financing to fund future working capital, capital expenditures,
additional acquisitions and other general corporate requirements;
|
|
|
|
create competitive disadvantages compared to other companies
with less debt; and
|
|
|
|
adversely affect the combined companys stock price.
|
19
Pulte
may not realize all of the anticipated benefits of the
transaction.
The combined companys ability to realize the anticipated
benefits of the merger will depend, to a large extent, on the
ability of Pulte to integrate the businesses of Centex with
Pulte. The combination of two independent companies is a
complex, costly and time-consuming process. As a result, the
combined company will be required to devote significant
management attention and resources to integrating the business
practices and operations of Pulte and Centex. The integration
process may disrupt the business of either or both of the
companies and, if implemented ineffectively, would preclude
realization of the full benefits expected by Pulte and Centex.
The failure of the combined company to meet the challenges
involved in integrating successfully the operations of Pulte and
Centex or otherwise to realize the anticipated benefits of the
transaction could cause an interruption of, or a loss of
momentum in, the activities of the combined company and could
seriously harm its results of operations. In addition, the
overall integration of the two companies may result in
unanticipated problems, expenses, liabilities, competitive
responses, loss of customer and supplier relationships, and
diversion of managements attention, and may cause the
combined companys stock price to decline. The difficulties
of combining the operations of the companies include, among
others:
|
|
|
|
|
consolidating corporate and administrative infrastructures and
eliminating duplicative operations;
|
|
|
|
maintaining employee morale and retaining key employees;
|
|
|
|
the diversion of managements attention from ongoing
business concerns;
|
|
|
|
coordinating geographically separate organizations;
|
|
|
|
unanticipated issues in integrating information technology,
communications and other systems;
|
|
|
|
managing tax costs or inefficiencies associated with integrating
the operations of the combined company; and
|
|
|
|
making any necessary modifications to operating control
standards to comply with the Sarbanes-Oxley Act of 2002 and the
rules and regulations promulgated thereunder.
|
In addition, even if the operations of Pulte and Centex are
integrated successfully, the combined company may not realize
the full benefits of the transaction, including the synergies,
cost savings or sales or growth opportunities that we expect.
These benefits may not be achieved within the anticipated time
frame, or at all. As a result, Pulte and Centex cannot assure
you that the combination of Centex with Pulte will result in the
realization of the full benefits anticipated from the
transaction.
The
price of Pulte common stock might decline prior to the
completion of the merger, which would decrease the value of the
merger consideration to be received by Centex stockholders in
the merger. Further, at the Centex special meeting, Centex
stockholders will not know the exact value of Pulte common stock
that will be issued in the merger.
The market price of Pulte common stock at the time the merger is
completed may vary significantly from the price on the date of
the Merger Agreement or from the price on the date of the Pulte
special meeting and Centex special meeting. Pulte common stock
has historically experienced volatility. On April 7, 2009,
the last full trading day prior to the public announcement of
the proposed merger, Pulte common stock closed at $10.77 per
share as reported on the NYSE. From April 8, 2009, through
July 17, 2009, the trading price of Pulte common stock
ranged from a closing high of $12.30 per share to a closing low
of $7.92 per share.
Under the Merger Agreement, each outstanding share of Centex
common stock (other than those shares held by Pulte or its
merger subsidiary Pi Nevada Building Company, and other than
treasury shares) will be converted into the right to receive,
upon completion of the merger, the merger consideration. The
exchange ratio is fixed and will not be adjusted for changes in
the stock prices of either company before the merger is
completed. As a result, any changes in the market price of Pulte
common stock will have a corresponding effect on the market
value of the merger consideration. Neither party, however, has a
right to terminate the Merger Agreement based upon changes in
the market price of Pulte or Centex common stock.
20
Pulte and Centex are working to complete the transaction as
quickly as possible. We currently expect that the merger will be
completed during the third quarter of 2009. Because the date
when the transaction is completed may be later than the date of
the special meetings, Pulte shareholders and Centex stockholders
may not know the exact value of the Pulte common stock that will
be issued in the merger at the time they vote on the proposal to
approve the Merger Agreement. As a result, if the market price
of Pulte common stock upon the completion of the merger is lower
than the market price on the date of the Centex special meeting,
the market value of the merger consideration received by Centex
stockholders in the merger will be lower than the market value
of the merger consideration at the time of vote by the Centex
stockholders. Moreover, during this interim period, events,
conditions or circumstances could arise that could have a
material impact or effect on Pulte, Centex or the industries in
which they operate.
To be
successful, the combined company must retain and motivate key
employees, and failure to do so could seriously harm the
combined company.
To be successful, the combined company must retain and motivate
executives and other key employees. Employees of Pulte and
Centex may experience uncertainty about their future roles with
the combined company until or after strategies for the combined
company are announced or executed. These circumstances may
adversely affect the combined companys ability to retain
key personnel. The combined company also must continue to
motivate employees and keep them focused on the strategies and
goals of the combined company, which effort may be adversely
affected as a result of the uncertainty and difficulties with
integrating Pulte and Centex. If the combined company is unable
to retain executives and other key employees, the roles and
responsibilities of such executive officers and employees will
need to be filled either by existing or new officers and
employees, which may require the combined company to devote time
and resources to identifying, hiring and integrating
replacements for the departed executives that could otherwise be
used to integrate the businesses of Pulte and Centex or
otherwise pursue business opportunities.
If the
combined company is unable to manage its growth, its business
and financial results could suffer.
The combined companys future financial results will depend
in part on its ability to profitably manage its core businesses,
including any growth that the combined company may be able to
achieve. Over the past several years, each of Pulte and Centex
has engaged in the identification of, and competition for,
growth and expansion opportunities. In order to achieve those
initiatives, the combined company will need to, among other
things, recruit, train, retain and effectively manage employees
and expand its operations and financial control systems. If the
combined company is unable to manage its businesses effectively
and profitably, its business and financial results could suffer.
The
issuance of shares of Pulte common stock to Centex stockholders
in the merger will substantially reduce the percentage ownership
interests of Pulte shareholders.
If the transaction is completed, Pulte and Centex expect that,
based on Centexs shares of common stock and equity awards
outstanding as of the Pulte record date, Pulte will issue
approximately 128.1 million shares of Pulte common stock in
the merger. Current Centex stockholders are expected to own
approximately 32.1%, and current Pulte shareholders are expected
to own approximately 67.9%, of the shares of Pulte common stock
outstanding after the merger. The merger will have no effect on
the number of shares of Pulte common stock owned by existing
Pulte shareholders. The issuance of approximately
128.1 million shares of Pulte common stock to Centex
stockholders and holders of equity-based incentive awards will
cause a significant reduction in the relative percentage
interests of current Pulte shareholders in earnings, voting,
liquidation value and book and market value. See
Summary Ownership of Pulte After the
Merger beginning on page 4.
The
pro forma financial statements are presented for illustrative
purposes only and may not be an indication of the combined
companys financial condition or results of operations
following the transaction.
The pro forma financial statements contained in this joint proxy
statement/prospectus are presented for illustrative purposes
only and may not be an indication of the combined companys
financial condition or results of operations following the
merger for several reasons. The pro forma financial statements
have been
21
derived from the historical financial statements of Pulte and
Centex and adjustments and assumptions have been made regarding
the combined company after giving effect to the transaction. The
information upon which these adjustments and assumptions have
been made is preliminary, and these kinds of adjustments and
assumptions are difficult to make with accuracy. Moreover, the
pro forma financial statements do not reflect all costs that are
expected to be incurred by the combined company in connection
with the transaction. For example, the impact of any incremental
costs incurred in integrating the two companies is not reflected
in the pro forma financial statements. As a result, the actual
financial condition and results of operations of the combined
company following the merger may not be consistent with, or
evident from, these pro forma financial statements.
The assumptions used in preparing the pro forma financial
information may not prove to be accurate, and other factors may
affect the combined companys financial condition or
results of operations following the transaction. Any decline or
potential decline in the combined companys financial
condition or results of operations may cause significant
variations in the stock price of the combined company. See
Unaudited Pro Forma Condensed Combined Financial
Statements beginning on page 95.
The
financial forecasts involve risks, uncertainties and
assumptions, many of which are beyond the control of Pulte and
Centex. As a result, they may not prove to be accurate and are
not necessarily indicative of current values or future
performance.
The financial forecasts of Pulte and Centex contained in this
joint proxy statement/prospectus involve risks, uncertainties
and assumptions and are not a guarantee of future performance.
The future financial results of Pulte, Centex and, if the merger
is completed, the combined company, may materially differ from
those expressed in the financial forecasts due to factors that
are beyond Pultes and Centexs ability to control or
predict. Neither Pulte nor Centex can provide any assurance that
their respective financial forecasts will be realized or that
their respective future financial results will not materially
vary from the financial forecasts. The financial forecasts cover
multiple years, and the information by its nature becomes
subject to greater uncertainty with each successive year. The
financial forecasts do not take into account any circumstances
or events occurring after the date they were prepared.
More specifically, the financial forecasts:
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necessarily make numerous assumptions, many of which are beyond
the control of Pulte and Centex and may not prove to be accurate;
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do not necessarily reflect revised prospects for Pultes
and Centexs businesses, changes in general business or
economic conditions, or any other transaction or event that has
occurred or that may occur and that was not anticipated at the
time the forecasts were prepared;
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are not necessarily indicative of current values or future
performance, which may be significantly more favorable or less
favorable than is reflected in the forecasts; and
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should not be regarded as a representation that the financial
forecasts will be achieved.
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The financial forecasts were not prepared with a view toward
public disclosure or compliance with published guidelines of the
SEC or the American Institute of Certified Public Accountants
for preparation and presentation of prospective financial
information or GAAP and do not reflect the effect of any
proposed or other changes in GAAP that may be made in the
future. See Financial Forecasts beginning on
page 115.
Some
of the conditions to the merger may be waived by Pulte or Centex
without resoliciting shareholder or stockholder approval of the
proposals approved by them.
Some of the conditions set forth in the Merger Agreement may be
waived by Pulte or Centex, subject to the agreement of the other
party in specific cases. See The Merger
Agreement Conditions to Completion of the
Merger beginning on page 78. If any conditions are
waived, Pulte and Centex will evaluate whether amendment of this
joint proxy statement/prospectus and resolicitation of proxies
are warranted. If the board of directors of Pulte or Centex
determines that resolicitation of their respective shareholders
or stockholders is
22
not warranted, the applicable company will have the discretion
to complete the merger without seeking further shareholder or
stockholder approval.
Provisions
of the Merger Agreement may deter alternative business
combinations and could negatively impact the stock prices of
Pulte and Centex if the Merger Agreement is terminated in
certain circumstances.
Restrictions in the Merger Agreement prohibit Centex from
soliciting any acquisition proposal or offer for a merger or
business combination with any other party, including a proposal
that might be advantageous to the stockholders of Centex when
compared to the terms and conditions of the merger with Pulte.
In addition, if the Merger Agreement is terminated, Centex may
be required in specified circumstances to pay a termination fee
of $24 million or $48 million to Pulte, and Pulte may
be required in specified circumstances to pay a termination fee
of $51 million or $102 million to Centex. In the event
the merger is terminated by Pulte or Centex in circumstances
that obligate either party to pay the termination fee to the
other party, the trading price of Pultes
and/or
Centexs stock may decline.
These provisions may deter third parties from proposing or
pursuing alternative business combinations that might result in
greater value to Centex stockholders than the merger with Pulte.
Directors
and executive officers of Centex have interests in the
transaction that are different from, or in addition to, the
interests of Centex stockholders.
Centexs executive officers and directors have financial
interests in the merger that are different from, or in addition
to, their interests as Centex stockholders. Stock-based awards
held by Centexs executive officers and directors will vest
in connection with the merger. In addition, each of
Centexs executive officers participates in the Centex
Corporation Plan Regarding Severance After a Change in Control,
which would provide severance and other benefits in the case of
qualifying terminations of employment following a change in
control, including the merger. Timothy R. Eller, chairman and
chief executive officer of Centex, has entered into a consulting
agreement with Pulte providing for certain payments and benefits
to him upon the completion of the merger, and for Mr. Eller
to serve as vice chairman of the Pulte board of directors and
serve as a consultant to Pulte, in each case, for a period of
two years following the completion of the merger. Pursuant to
the terms of Centexs nonqualified deferred compensation
arrangements, certain benefits payable to executive officers
will vest upon completion of the merger.
The
merger may result in substantial goodwill for the combined
company. If the combined companys goodwill becomes
impaired, then the profits of the combined company may be
significantly reduced or eliminated and shareholders
equity may be reduced.
The unaudited pro forma financial statements reflect preliminary
estimates of goodwill of approximately $241.6 million as a
result of the merger. This approximate amount of goodwill
assumes that the Pulte common stock received by the Centex
stockholders in the merger has a market value of $8.96 per
share (the closing price of Pulte common stock on the NYSE on
June 25, 2009). The actual amount of goodwill recorded may
be materially different and will depend in part on the market
value of Pulte common stock as of the date on which the merger
is completed and the appropriate allocation of purchase price,
which may be impacted by a number of factors, including changes
in the net assets acquired and changes in the fair values of the
net assets acquired. On at least an annual basis, Pulte assesses
whether there has been an impairment in the value of goodwill.
If the carrying value of goodwill exceeds its estimated fair
value, impairment is deemed to have occurred and the carrying
value of goodwill is written down to fair value. Under GAAP,
this would result in a charge to the combined companys
operating earnings. Accordingly, any determination requiring the
write-off of a significant portion of goodwill recorded in
connection with the merger would negatively affect the combined
companys results of operations.
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The
combined company may be subject to additional asset impairments
in the future.
Both Pulte and Centex have incurred in recent periods
substantial impairments of their land and certain other assets.
The market value of land, building lots and housing inventories
can fluctuate significantly as a result of changing market
conditions and the measures that the combined company will
employ to manage inventory risk may not be adequate to insulate
its operations from a severe drop in inventory values. If
housing demand continues to decrease below what the combined
company anticipates, the combined company may not be able to
generate profits similar to what Pulte and Centex have made in
the past, may experience less than anticipated profits,
and/or may
not be able to recover its costs when it sells and builds homes.
When market conditions are such that land values are not
appreciating, option arrangements previously entered into may
become less desirable, at which time the combined company may
elect to forego deposits and pre-acquisition costs and terminate
the agreement. In the face of adverse market conditions, the
combined company may have substantial inventory carrying costs,
may have to write down its inventory to its fair value,
and/or may
have to sell land or homes at a loss.
As a result of the changing market conditions in the
homebuilding industry that have occurred since early 2006, both
Pulte and Centex have incurred significant land-related charges
resulting from the write-off of deposits and pre-acquisition
costs related to land transactions that they each no longer plan
to pursue, net realizable valuation adjustments related to land
positions sold or held for sale, impairments on land assets
related to communities under development or to be developed in
the future, and impairments of their respective investments in
unconsolidated joint ventures. It is possible that the estimated
cash flows from these projects may change and could result in a
future need of the combined company to record additional
valuation adjustments.
If conditions in the homebuilding industry worsen in the future
or if the combined companys strategy related to certain
communities changes, the combined company may be required to
evaluate its assets, including additional projects, for
additional impairments or write-downs, which could result in
additional charges that might be significant. Pulte and Centex
cannot predict the duration of the downturn in the homebuilding
industry, nor provide any assurances that the adjustments that
the combined company intends to make in its operating strategy
to address the conditions will be successful.
We also currently expect that the combined company will have
over $200 million of intangible assets relating to
tradenames, of which approximately $110 million will have
resulted from the merger. The combined company will periodically
assess whether there has been an impairment in the value of
these intangible assets. If an impairment is deemed to have
occurred, then the carrying value of the tradenames will be
written down to fair value. Under GAAP, this would result in a
charge to the combined companys operating earnings.
Accordingly, any determination requiring the write-off of a
significant portion of the value of the tradenames recorded in
connection with the merger would negatively affect the combined
companys results of operations.
Pulte
and Centex will incur significant transaction and merger-related
integration costs in connection with the merger.
Pulte and Centex expect to incur costs associated with
completing the merger and integrating the operations of the two
companies. Pulte and Centex estimate that their transaction
costs for the merger will be approximately $20.0 million
and $30.0 million, respectively, which include fees for
investment banking, legal, accounting, due diligence, tax,
valuation, printing and other various services in connection
with the transaction. The substantial majority of additional
non-recurring expenses resulting from the merger will be
comprised of facilities and systems consolidation costs and
employment-related costs. Pulte currently estimates severance
costs for cash payments to certain senior executive positions at
Centex in connection with termination of employment to be
approximately $9.6 million. Pulte is continuing to assess
the magnitude of the facilities and systems consolidation costs
and other non-recurring employment-related costs that will be
required in connection with the merger and, therefore, is unable
to provide an estimate of these costs at this time. Additional
unanticipated costs may be incurred in the integration of the
businesses of Pulte and Centex. Although Pulte and Centex expect
that the elimination of duplicative costs, as well as the
realization of other
24
efficiencies related to the integration of the businesses, may
offset incremental transaction and merger-related costs over
time, we cannot give any assurance that this net benefit will be
achieved in the near term, or at all.
The
combined company may not be able to realize Pultes and
Centexs deferred income tax assets.
As of March 31, 2009, Pulte had net deferred tax assets of
$1.27 billion for which a $1.27 billion valuation
allowance was recorded, while Centex had net deferred tax assets
of $1.29 billion for which a $1.29 billion valuation
allowance was recorded. The ultimate realization of the deferred
tax assets is dependent upon a variety of factors, including
taxable income in prior carryback years, future taxable income,
tax planning strategies, potential legislative changes and
reversals of existing taxable temporary differences.
Furthermore, Pultes and Centexs ability to utilize
net operating losses, which we refer to as NOLs, built-in
losses, which we refer to as BILs, and tax credit carryforwards
to offset its future taxable income would be limited if Pulte or
Centex were to undergo an ownership change within
the meaning of Section 382 of the Internal Revenue Code. In
general, an ownership change occurs whenever the
percentage of the stock of a corporation owned by
5-percent shareholders (within the meaning of
Section 382 of the Internal Revenue Code) increases by more
than 50 percentage points over the lowest percentage of the
stock of such corporation owned by such 5-percent
shareholders at any time over a three-year testing period.
If a corporation undergoes an ownership change within the
meaning of Section 382 of the Internal Revenue Code, its
ability to utilize NOLs, BILs and other tax benefits is subject
to an annual limitation.
As a result of the merger, Centex will experience an ownership
change and, while it is not currently expected, Pulte may also
experience an ownership change. To preserve Pultes ability
to utilize NOLs, BILs and other tax benefits in the future
without a Section 382 limitation, Pulte has adopted a
shareholder rights plan, which is triggered upon certain
transfers of its securities, and has amended its by-laws to
prohibit certain transfers of its securities. Notwithstanding
the foregoing measures, there can be no assurance that Pulte
will not undergo an ownership change within the meaning of
Section 382. See Description of Pulte Capital
Stock Transfer Restrictions beginning on
page 122.
Risks
Relating to Pulte and Centex
Pulte and Centex are, and will continue to be, subject to the
risks described in (1) Part I, Item 1A in
Pultes Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008 and
(2) Part I, Item 1A in Centexs Annual
Report on
Form 10-K
for the fiscal year ended March 31, 2009, in each case as
filed with the SEC and incorporated by reference into this joint
proxy statement/prospectus. See Additional
Information Where You Can Find More
Information beginning on page 134.
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CAUTIONARY
STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This joint proxy statement/prospectus includes
forward-looking statements within the meaning of
Section 27A of the Securities Act, and Section 21E of
the Exchange Act. Such statements may include, but are not
limited to, statements about the benefits of the proposed
transaction, including future financial and operating results,
and the combined companys plans, objectives, expectations
and intentions. These statements are subject to a number of
risks, uncertainties and other factors that could cause our
actual results, performance, prospects or opportunities, as well
as those of the markets we serve or intend to serve, to differ
materially from those expressed in, or implied by, these
statements. You can identify these statements by the fact that
they do not relate to matters of a strictly factual or
historical nature and generally discuss or relate to forecasts,
estimates or other expectations regarding future events.
Generally, the words believe, expect,
intend, estimate,
anticipate, project, may,
can, could, might,
will and similar expressions identify
forward-looking statements, including statements related to
expected operating and performing results, planned transactions,
planned objectives of management, future developments or
conditions in the industries in which we participate and other
trends, developments and uncertainties that may affect our
business in the future.
Such risks, uncertainties and other factors include, among other
things:
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the failure of Centexs stockholders to approve the
proposal to approve the Merger Agreement;
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the failure of Pultes shareholders to approve either the
proposal to approve the charter amendment to increase the number
of authorized shares of common stock or the proposal to approve
the issuance of shares in the merger;
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the possibility that the proposed transaction does not close,
including due to the failure to satisfy the closing conditions;
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the possibility that the expected efficiencies and cost savings
of the proposed transaction will not be realized, or will not be
realized within the expected time period;
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the risk that the Pulte and Centex businesses will not be
integrated successfully;
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disruption from the proposed transaction making it more
difficult to maintain business and operational relationships;
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interest rate changes and the availability of mortgage financing;
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continued volatility in, and potential further deterioration of,
the debt and equity markets;
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competition within the industries in which Pulte and Centex
operate;
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the availability and cost of land and raw materials used by
Pulte and Centex in their homebuilding operations;
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the availability and cost of insurance covering risks associated
with Pultes and Centexs businesses;
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shortages and the cost of labor;
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adverse weather conditions, which may slow down construction of,
or damage, new homes built by Pulte or Centex;
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slow growth initiatives
and/or local
building moratoria;
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the ability to utilize NOLs, BILs and other tax credit
carryforwards;
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governmental regulation, including the effects from the
Emergency Economic Stabilization Act, the American Recovery and
Reinvestment Act, and the interpretation of tax, labor and
environmental laws;
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changes in consumer confidence and preferences;
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terrorist acts and other acts of war; and
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other factors of national, regional and global scale, including
those of a political, economic, business and competitive nature.
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Additional risks, uncertainties and other factors include those
discussed under the heading Risk Factors and in
documents incorporated by reference into this joint proxy
statement/prospectus. You are cautioned not to place undue
reliance on these forward-looking statements, which speak only
as of the date of this joint proxy statement/prospectus or, in
the case of documents incorporated by reference, as of the date
of those documents. Pulte and Centex disclaim any intent or
obligation to update any forward-looking statements contained
herein.
27
THE PULTE
SPECIAL MEETING
General
This joint proxy statement/prospectus is being provided to Pulte
shareholders as part of a solicitation of proxies by the Pulte
board of directors for use at the Pulte special meeting. This
joint proxy statement/prospectus provides Pulte shareholders
with important information they need to know to be able to vote,
or instruct their brokers or other nominees to vote, at the
Pulte special meeting.
Date,
Time, Place and Purpose of the Pulte Special Meeting
The Pulte special meeting will be held at the Auburn Hills
Marriott Pontiac at Centerpoint, located at 3600 Centerpoint
Parkway, Pontiac, Michigan, on August 18, 2009, at
10:00 a.m., local time.
The Pulte special meeting is being held for the following
purposes:
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to consider and vote upon the proposal to approve the issuance
of shares in the merger;
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to consider and vote upon the proposal to approve the charter
amendment to increase the number of authorized shares of common
stock;
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to consider and vote upon the proposal to approve the charter
amendment to change Pultes corporate name; and
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to transact any other business as may properly come before the
special meeting.
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Recommendation
of the Pulte Board of Directors
The Pulte board of directors has unanimously determined that the
proposed merger is advisable and in the best interests of Pulte
and its shareholders and unanimously recommends that Pulte
shareholders vote FOR the proposal to approve
the issuance of shares in the merger, FOR the
proposal to approve the charter amendment to increase the number
of authorized shares of common stock, FOR the
proposal to approve the charter amendment to change Pultes
corporate name and FOR the Pulte meeting
adjournment proposal. See The Merger
Recommendation of the Pulte Board of Directors and Its Reasons
for the Merger beginning on page 45.
Record
Date; Outstanding Shares; Shares Entitled to Vote
Only holders of record of Pulte common stock at the close of
business on the Pulte record date, July 10, 2009, are
entitled to notice of and to vote at the Pulte special meeting.
As of the Pulte record date, there were 258,603,672 shares
of Pulte common stock outstanding and entitled to vote at the
special meeting, held by 1,760 holders of record. Each
holder of Pulte common stock is entitled to one vote for each
share of Pulte common stock owned as of the Pulte record date.
A complete list of Pulte shareholders will be available for
review at the special meeting.
Quorum
and Vote Required
A majority of the shares of Pulte common stock issued and
outstanding and entitled to vote as of the Pulte record date
must be present in person or represented by proxy at the Pulte
special meeting to constitute a quorum. A quorum must be present
before a vote can be taken on the proposal to approve the
issuance of shares in the merger, the proposal to approve the
charter amendment to increase the number of authorized shares of
common stock, the proposal to approve the charter amendment to
change Pultes corporate name or any other matter except
adjournment or postponement of the meeting due to the absence of
a quorum. Abstentions and broker non-votes, if any, which are
described below, will be counted as present for purposes of
determining the presence of a quorum at the Pulte special
meeting. If a quorum is not present with respect to the proposal
to approve the issuance of shares in the merger or the proposal
to approve the charter amendment to increase the number of
authorized shares of common stock or if there are not sufficient
votes in
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favor of either proposal, Pulte expects that the Pulte special
meeting will be adjourned to solicit additional proxies, subject
to approval of the Pulte meeting adjournment proposal by the
affirmative vote of the holders of a majority of the shares of
Pulte common stock present in person or by proxy at the Pulte
special meeting and entitled to vote thereon. At any subsequent
reconvening of the special meeting, all proxies will be voted in
the same manner as the proxies would have been voted at the
original convening of the special meeting, except for any
proxies that have been effectively revoked or withdrawn prior to
the subsequent meeting.
In accordance with NYSE listing requirements, the approval by
Pulte shareholders of the proposal to approve the issuance of
shares in the merger requires the approval of a majority of the
votes cast on the proposal, provided that the total votes cast
on this proposal represent over 50% of the outstanding shares of
Pulte common stock entitled to vote on this proposal. Votes
for, votes against and abstentions count
as votes cast, while broker non-votes do not count as votes cast
for this purpose. All outstanding shares of Pulte common stock,
including broker non-votes, count as shares entitled to vote.
Thus, the total sum of votes for, plus votes
against, plus abstentions, which we refer to as the
NYSE Votes Cast, must be greater than 50% of the total
outstanding shares of Pulte common stock. The number of votes
for the proposal must be greater than 50% of the
NYSE Votes Cast.
In accordance with the MBCA, approval of the proposal to approve
the charter amendment to increase the number of authorized
shares of common stock and the proposal to approve the charter
amendment to change Pultes corporate name each requires
the affirmative vote of a majority of the outstanding shares
entitled to vote on the amendment.
In accordance with the MBCA and Pultes by-laws, approval
of the Pulte meeting adjournment proposal requires the
affirmative vote of the holders of a majority of the shares of
Pulte common stock present in person or represented by proxy at
the Pulte special meeting and entitled to vote thereon.
Voting by
Pultes Directors and Executive Officers
As of the Pulte record date for the special meeting, the
directors and executive officers of Pulte as a group owned and
were entitled to vote 44,652,780 shares of Pulte common
stock, or approximately 17.27% of the outstanding shares of
Pulte on that date.
In connection with the Merger Agreement, the following directors
and officers of Pulte entered into voting agreements with
Centex, pursuant to which they have agreed to vote their shares
of Pulte in support of the transaction: William J. Pulte,
Pultes founder and current chairman and a director,
Mr. Dugas, Roger A. Cregg, executive vice president and
chief financial officer of Pulte, Steven C. Petruska, executive
vice president and chief operating officer of Pulte, and Brian
P. Anderson, Debra J. Kelly-Ennis, David N. McCammon, Bernard W.
Reznicek and William B. Smith, each a director of Pulte. Alan E.
Schwartz, a director of Pulte until his retirement as a director
of Pulte upon the expiration of his term at the 2009 annual
meeting of shareholders, has also entered into such a voting
agreement with Centex. As of the Pulte record date, these
directors (including Mr. Schwartz) and officers
collectively owned and were entitled to vote
44,207,846 shares of Pulte common stock, or approximately
17.09% of the outstanding shares of Pulte. All of Pultes
directors and executive officers entitled to vote at the Pulte
special meeting, including those that have not entered into
voting agreements with Centex, have evidenced their intent to
vote for the proposal to approve the issuance of shares in the
merger, the proposal to approve the charter amendment to
increase the number of authorized shares of common stock, the
proposal to approve the charter amendment to change Pultes
corporate name and the Pulte meeting adjournment proposal.
Voting;
Proxies; Revocation
Holders of Pulte common stock as of the Pulte record date may
vote by proxy or in person at the Pulte special meeting. Votes
cast by proxy or in person at the Pulte special meeting will be
tabulated and certified by Pultes transfer agent.
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Voting
in Person
Pulte shareholders who plan to attend the Pulte special meeting
and wish to vote in person will be given a ballot at the special
meeting. Please note, however, that Pulte shareholders who hold
their shares in street name, which means such shares
are held of record by a broker, bank or other nominee, and who
wish to vote in person at the Pulte special meeting, must bring
to the special meeting a proxy from the record holder of the
shares authorizing such Pulte shareholder to vote at the Pulte
special meeting.
Voting
by Proxy
The vote of each Pulte shareholder is very important.
Accordingly, Pulte shareholders who hold their shares as a
record holder should complete, sign and return the enclosed
proxy card whether or not they plan to attend the Pulte special
meeting in person. Pulte shareholders should vote their proxy
even if they plan to attend the Pulte special meeting. Pulte
shareholders can always change their vote at the special
meeting. Voting instructions are included on the enclosed proxy
card. If a Pulte shareholder properly gives his or her proxy and
submits it to Pulte in time to vote, one of the individuals
named as such Pulte shareholders proxy will vote the
shares as such Pulte shareholder has directed. A proxy card is
enclosed for use by Pulte shareholders.
The method of voting by proxy differs for shares held as a
record holder and shares held in street name. If a
Pulte shareholder holds shares of Pulte common stock as a record
holder, he or she may vote by completing, dating and signing the
enclosed proxy card and promptly returning it in the enclosed,
pre-addressed, postage-paid envelope or otherwise mailing it to
Pulte, or by submitting a proxy over the Internet or by
telephone by following the instructions on the enclosed proxy
card. If a Pulte shareholder holds shares of Pulte common stock
in street name, which means such shares are held of record by a
broker, bank or nominee, the Pulte shareholder will receive
instructions from his or her broker, bank or other nominee that
the Pulte shareholder must follow in order to vote his or her
shares. A Pulte shareholders broker, bank or nominee may
allow such Pulte shareholder to deliver voting instructions over
the Internet or by telephone. Pulte shareholders who hold their
shares in street name should refer to the voting instructions
from their broker, bank or nominee that accompany this joint
proxy statement/prospectus.
All properly signed proxies that are received prior to the Pulte
special meeting and that are not revoked will be voted at the
special meeting according to the instructions indicated on the
proxies or, if no direction is indicated, they will be voted
FOR the proposal to approve the issuance of
shares in the merger, FOR the proposal to
approve the charter amendment to increase the number of
authorized shares of common stock, FOR the
proposal to approve the charter amendment to change Pultes
corporate name and FOR the Pulte meeting
adjournment proposal.
Revocation
of Proxy
A Pulte shareholder may revoke his or her proxy at any time
before it is voted at the Pulte special meeting by taking any of
the following actions:
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delivering to the corporate secretary of Pulte a signed written
notice of revocation, bearing a date later than the date of the
proxy, stating that the proxy is revoked;
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signing and delivering a new proxy, relating to the same shares
and bearing a later date;
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submitting another proxy by telephone or on the Internet (the
latest telephone or Internet voting instructions are
followed); or
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attending the Pulte special meeting and voting in person,
although attendance at the special meeting will not, by itself,
revoke a proxy.
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If a Pulte shareholders shares are held in street
name, he or she may change his or her vote by submitting
new voting instructions to his or her broker, bank or other
nominee. Pulte shareholders must contact their broker, bank or
other nominee to find out how to do so.
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Written notices of revocation and other communications with
respect to the revocation of Pulte proxies should be addressed
to:
Pulte Homes, Inc.
100 Bloomfield Hills Parkway, Suite 300
Bloomfield Hills, Michigan 48304
Attn.: Corporate Secretary
Abstentions
and Broker Non-Votes
For purposes of the Pulte shareholder vote, an abstention, which
occurs when a shareholder attends a meeting, either in person or
by proxy, but abstains from voting, will have the same effect as
voting against the proposal to approve the issuance of shares in
the merger, the proposal to approve the charter amendment to
increase the number of authorized shares of common stock and the
proposal to approve the charter amendment to change Pultes
corporate name, but will not affect the Pulte meeting
adjournment proposal.
Under the listing requirements of the NYSE, brokers who hold
shares of Pulte common stock in street name for a
beneficial owner of those shares typically have the authority to
vote in their discretion on routine proposals when
they have not received instructions from beneficial owners.
However, brokers are not allowed to exercise their voting
discretion with respect to the approval of matters that the NYSE
determines to be non-routine, such as approval of
the issuance of shares of Pulte common stock pursuant to the
Merger Agreement, the proposal to approve the charter amendment
to increase the number of authorized shares of common stock or
the proposal to approve the charter amendment to change
Pultes corporate name, without specific instructions from
the beneficial owner. Broker non-votes are shares held by a
broker or other nominee that are represented at the meeting, but
with respect to which the broker or nominee is not instructed by
the beneficial owner of such shares to vote on the particular
proposal and the broker does not have discretionary voting power
on this proposal. If a Pulte shareholders broker holds
such shareholders Pulte common stock in street
name, the broker will vote such shareholders shares
only if the shareholder provides instructions on how to vote by
filling out the voter instruction form sent to the shareholder
by his or her broker with this joint proxy statement/prospectus.
It is expected that brokers and other nominees will not have
discretionary authority to vote on the proposal to approve the
issuance of shares in the merger, the proposal to approve the
charter amendment to increase the number of authorized shares of
common stock, the proposal to approve the charter amendment to
change Pultes corporate name or the Pulte meeting
adjournment proposal.
Proxy
Solicitation
Pulte is soliciting proxies for the Pulte special meeting from
Pulte shareholders. Pulte will bear the entire cost of
soliciting proxies from Pulte shareholders, except that Pulte
and Centex have each agreed to share equally all expenses
incurred in connection with the printing of this joint proxy
statement/prospectus and related proxy materials. In addition to
the solicitation of proxies by mail, Pulte will request that
brokers, banks and other nominees send proxies and proxy
materials to the beneficial owners of Pulte common stock held by
them and secure their voting instructions, if necessary. Pulte
will reimburse those record holders for their reasonable
expenses. Pulte has also made arrangements with D.F.
King & Co., Inc. to assist it in soliciting proxies,
and has agreed to pay D.F. Kings reasonable and customary
charges for such services, currently estimated not to exceed
$12,500, plus expenses. Pulte also may use several of its
regular employees, who will not be specially compensated, to
solicit proxies from Pulte shareholders, either personally or by
telephone or electronic mail.
Other
Business; Adjournments
Pulte does not expect that any matter other than the proposals
presented in this joint proxy statement/prospectus will be
brought before the Pulte special meeting. However, if other
matters incident to the conduct
31
of the special meeting are properly presented at the special
meeting, the persons named as proxies will vote in accordance
with their best judgment with respect to those matters.
An adjournment may be made from time to time by approval of the
holders of shares representing a majority of the votes present
in person or by proxy at the special meeting, whether or not a
quorum exists, without further notice other than by an
announcement made at the special meeting.
Assistance
If a Pulte shareholder needs assistance in completing his or her
proxy card or has questions regarding the Pulte special meeting,
he or she should contact D.F. King & Co., Inc., which
is assisting Pulte with the solicitation of proxies, at
(800) 714-3313
(toll-free) or
(212) 269-5550
(collect) or via
e-mail to
pulteproxy@dfking.com. Alternatively, Pulte shareholders may
contact Pulte Investor Relations at
(248) 647-2750
or via
e-mail to
calvin.boyd@pulte.com or by writing to Pulte Homes, Inc., 100
Bloomfield Hills Parkway, Suite 300, Bloomfield Hills,
Michigan 48304, Attn.: Investor Relations.
32
THE
CENTEX SPECIAL MEETING
General
This joint proxy statement/prospectus is being provided to
Centex stockholders as part of a solicitation of proxies by the
Centex board of directors for use at the Centex special meeting.
This joint proxy statement/prospectus provides Centex
stockholders with important information they need to know to be
able to vote, or instruct their brokers or other nominees to
vote, at the Centex special meeting.
Date,
Time, Place and Purpose of the Centex Special Meeting
The special meeting of Centex stockholders will be held on the
10th floor of our headquarters building, located at
2728 N. Harwood Street, Dallas, Texas, on
August 18, 2009, at 11:00 a.m., local time.
The Centex special meeting is being held for the following
purposes:
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to consider and vote upon the proposal to approve the Merger
Agreement;
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to consider and vote upon the Centex meeting adjournment
proposal; and
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to transact any other business as may properly come before the
special meeting.
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Recommendation
of the Centex Board of Directors
The Centex board of directors has unanimously determined that
the proposed merger is advisable and in the best interests of
Centex and its stockholders and unanimously recommends that
Centex stockholders vote FOR the proposal to
approve the Merger Agreement and FOR the
Centex meeting adjournment proposal. See The
Merger Recommendation of the Centex Board of
Directors and Its Reasons for the Merger beginning on
page 49.
Record
Date; Outstanding Shares; Shares Entitled to Vote
Only holders of record of Centex common stock at the close of
business on the Centex record date, July 10, 2009, are
entitled to notice of and to vote at the Centex special meeting.
As of the Centex record date, there were 125,319,612 shares
of Centex common stock outstanding and entitled to vote at the
special meeting, held by 2,893 holders of record. Each
holder of Centex common stock is entitled to one vote for each
share of Centex common stock owned as of the Centex record date.
A complete list of Centex stockholders will be available for
review at the special meeting and at the executive offices of
Centex during regular business hours for a period of ten days
before the special meeting.
Quorum
and Vote Required
A majority of the shares of Centex common stock entitled to vote
as of the Centex record date must be present in person or
represented by proxy at the Centex special meeting to constitute
a quorum. A quorum must be present before a vote can be taken on
the proposal to approve the Merger Agreement or any other matter
except adjournment or postponement of the meeting due to the
absence of a quorum. Abstentions and broker non-votes, if any,
which are described below, will be counted as present for
purposes of determining the presence of a quorum at the Centex
special meeting. If a quorum is not present or if there are not
sufficient votes in favor of the proposal to approve the Merger
Agreement, Centex expects that the special meeting will be
adjourned to solicit additional proxies, subject to approval of
the Centex meeting adjournment proposal by the affirmative vote
of the holders of a majority of the shares of Centex common
stock present in person or represented by proxy at the Centex
special meeting and entitled to vote thereon. At any subsequent
reconvening of the special meeting, all proxies will be voted in
the same manner as the proxies would have been voted at the
original convening of the special meeting, except for any
proxies that have been effectively revoked or withdrawn prior to
the subsequent meeting.
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In accordance with the Nevada Revised Statutes, which we refer
to as the NRS, approval of the proposal to approve the Merger
Agreement requires the affirmative vote of the holders of a
majority of the outstanding shares of Centex common stock
entitled to vote on this proposal at the Centex special meeting.
In accordance with the NRS and Centexs by-laws, approval
of the Centex meeting adjournment proposal requires the
affirmative vote of the holders of a majority of the shares of
Centex common stock present in person or represented by proxy at
the special meeting and entitled to vote thereon.
Voting by
Centexs Directors and Executive Officers
As of the Centex record date for the special meeting, the
directors and executive officers of Centex as a group owned and
were entitled to vote 2,199,199 shares of Centex common
stock, or approximately 1.75% of the outstanding shares of
Centex on that date.
In connection with the Merger Agreement, the following directors
and officers of Centex entered into voting agreements with
Pulte, pursuant to which they have agreed to vote their shares
of Centex in support of the transaction: Timothy R. Eller,
chairman and chief executive officer of Centex and a director,
Catherine R. Smith, executive vice president and chief financial
officer of Centex, and Barbara T. Alexander, Thomas J. Falk,
Clint W. Murchison, III, Frederic M. Poses, James J. Postl,
David W. Quinn, Matthew K. Rose and Thomas M. Schoewe, each a
director of Centex. As of the Centex record date, these
directors and officers collectively owned and were entitled to
vote 1,694,109 shares of Centex common stock, or
approximately 1.35% of the outstanding shares of Centex common
stock. All of Centexs directors and executive officers
entitled to vote at the Centex special meeting, including those
that have not entered into voting agreements with Pulte, have
evidenced their intent to vote for the proposal to approve the
Merger Agreement and the Centex meeting adjournment proposal.
Voting;
Proxies; Revocation
Holders of Centex common stock as of the Centex record date may
vote by proxy or in person at the Centex special meeting. Votes
cast by proxy or in person at the Centex special meeting will be
tabulated and certified by Centexs transfer agent.
Voting
in Person
Centex stockholders who plan to attend the Centex special
meeting and wish to vote in person will be given a ballot at the
special meeting. Please note, however, that Centex stockholders
who hold their shares in street name, which means
such shares are held of record by a broker, bank or other
nominee, and who wish to vote in person at the Centex special
meeting, must bring to the special meeting a proxy from the
record holder of the shares authorizing such Centex stockholder
to vote at the Centex special meeting.
Voting
by Proxy
The vote of each Centex stockholder is very important.
Accordingly, Centex stockholders who hold their shares as a
record holder should complete, sign and return the enclosed
proxy card whether or not they plan to attend the Centex special
meeting in person. Centex stockholders should vote their proxy
even if they plan to attend the Centex special meeting. Centex
stockholders can always change their vote at the special
meeting. Voting instructions are included on the enclosed proxy
card. If a Centex stockholder properly gives his or her proxy
and submits it to Centex in time to vote, one of the individuals
named as such Centex stockholders proxy will vote the
shares as such Centex stockholder has directed. A proxy card is
enclosed for use by Centex stockholders.
The method of voting by proxy differs for shares held as a
record holder and shares held in street name. If a
Centex stockholder holds shares of Centex common stock as a
record holder, he or she may vote by completing, dating and
signing the enclosed proxy card and promptly returning it in the
enclosed, pre-addressed, postage-paid envelope or otherwise
mailing it to Centex, or by submitting a proxy over the Internet
or by telephone by following the instructions on the enclosed
proxy card. If a Centex stockholder holds shares
34
of Centex common stock in street name, which means such shares
are held of record by a broker, bank or other nominee, the
Centex stockholder will receive instructions from his or her
broker, bank or other nominee that the Centex stockholder must
follow in order to vote his or her shares. Centex stockholders
who hold their shares in street name should refer to the voting
instructions from their broker, bank or nominee that accompany
this joint proxy statement/prospectus.
All properly signed proxies that are received prior to the
special meeting and that are not revoked will be voted at the
special meeting according to the instructions indicated on the
proxies or, if no direction is indicated, they will be voted
FOR the proposal to approve the Merger
Agreement and FOR the Centex meeting
adjournment proposal.
Revocation
of Proxy
A Centex stockholder may revoke his or her proxy at any time
before it is voted at the Centex special meeting by taking any
of the following actions:
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delivering to the corporate secretary of Centex a signed written
notice of revocation, bearing a date later than the date of the
proxy, stating that the proxy is revoked;
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signing and delivering a new proxy, relating to the same shares
and bearing a later date;
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submitting another proxy by telephone or on the Internet (the
latest telephone or Internet voting instructions are
followed); or
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attending the Centex special meeting and voting in person,
although attendance at the special meeting will not, by itself,
revoke a proxy.
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If a Centex stockholders shares are held in street
name, he or she may change his or her vote by submitting
new voting instructions to his or her broker, bank or other
nominee. Centex stockholders must contact their broker, bank or
other nominee to find out how to do so.
Written notices of revocation and other communications with
respect to the revocation of Centex proxies should be addressed
to:
Centex Corporation
2728 N. Harwood Street
Dallas, Texas 75201
Attn.: Corporate Secretary
Abstentions
and Broker Non-Votes
For purposes of the proposal to approve the Merger Agreement,
abstentions will have the same effect as voting against the
proposals.
Under the listing requirements of the NYSE, brokers who hold
shares of Centex common stock in street name for a
beneficial owner of those shares typically have the authority to
vote in their discretion on routine proposals when
they have not received instructions from beneficial owners.
However, brokers are not allowed to exercise their voting
discretion with respect to the approval of matters that the NYSE
determines to be non-routine, such as approval of
the proposal to approve the Merger Agreement, without specific
instructions from the beneficial owner. Broker non-votes are
shares held by a broker or other nominee that are represented at
the meeting, but with respect to which the broker or nominee is
not instructed by the beneficial owner of such shares to vote on
the particular proposal and the broker does not have
discretionary voting power on the proposal. If a Centex
stockholders broker holds such stockholders Centex
common stock in street name, the broker will vote
such stockholders shares only if the stockholder provides
instructions on how to vote by filling out the voter instruction
form sent to the stockholder by his or her broker with this
joint proxy statement/prospectus. It is expected that brokers
and other nominees will not have discretionary authority to vote
on the proposal to approve the Merger Agreement.
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For purposes of the Centex meeting adjournment proposal,
abstentions will have the same effect as voting against the
proposal. It is expected that brokers and other nominees will
not have discretionary voting authority on this proposal.
Proxy
Solicitation
Centex is soliciting proxies for the Centex special meeting from
Centex stockholders. Centex will bear the entire cost of
soliciting proxies from Centex stockholders, except that Pulte
and Centex have each agreed to share equally all expenses
incurred in connection with the printing of this joint proxy
statement/prospectus and related proxy materials. In addition to
the solicitation of proxies by mail, Centex will request that
brokers, banks and other nominees send proxies and proxy
materials to the beneficial owners of Centex common stock held
by them and secure their voting instructions, if necessary.
Centex will reimburse those record holders for their reasonable
expenses. Centex has also made arrangements with Innisfree
M&A Incorporated to assist it in soliciting proxies, and
has agreed to pay a fee not to exceed $35,000 plus expenses for
those services. Centex also may use several of its regular
employees, who will not be specially compensated, to solicit
proxies from Centex stockholders, either personally or by
telephone or electronic mail.
Other
Business; Adjournments
Centex does not expect that any matter other than the proposals
presented in this joint proxy statement/prospectus will be
brought before the Centex special meeting. However, if other
matters incident to the conduct of the special meeting are
properly presented at the special meeting, the persons named as
proxies will vote in accordance with their best judgment with
respect to those matters. An adjournment may be made from time
to time by approval of the holders of shares representing a
majority of the votes present in person or by proxy at the
special meeting, whether or not a quorum exists, without further
notice other than by an announcement made at the special meeting.
Assistance
If a Centex stockholder needs assistance in completing his or
her proxy card or has questions regarding the Centex special
meeting, he or she should contact Innisfree M&A
Incorporated, which is assisting Centex with the solicitation of
proxies, at
(877) 717-3930
(toll-free). Banks and brokers may call collect at
(212) 750-5833.
Centex stockholders with requests for materials only may contact
Innisfree via
e-mail at
info@innisfreema.com. Alternatively, Centex stockholders may
contact Centex Investor Relations at
(214) 981-5000
or via
e-mail to
ir@centex.com or write to Centex Corporation,
P.O. Box 199000, Dallas, Texas
75219-9000,
Attn.: Investor Relations.
36
THE
MERGER
The following is a description of the material aspects of the
merger. While we believe that the following description covers
the material terms of the merger, the description may not
contain all of the information that is important to you. We
encourage you to read carefully this entire joint proxy
statement/prospectus, including the Merger Agreement attached to
this joint proxy statement/prospectus as Annex A, for a
more complete understanding of the merger.
General
Each of the Pulte and Centex board of directors has unanimously
approved the Merger Agreement and the transactions contemplated
by the Merger Agreement, including the merger. Upon completion
of the merger, Pi Nevada Building Company, a wholly owned
subsidiary of Pulte, will merge with and into Centex, with
Centex continuing as the surviving corporation and a wholly
owned subsidiary of Pulte. Each share of Centex common stock,
other than those shares held by Pulte or Pi Nevada Building
Company and other than treasury shares, will be converted into
the right to receive the merger consideration, upon the terms
provided in the Merger Agreement and as described below under
The Merger Agreement Merger
Consideration beginning on page 75.
Background
of the Merger
2008 was an extraordinarily difficult year in the home
building industry. According to the U.S. Census Bureau,
only 485,000 new homes were sold in 2008, a 37.5% decline from
2007 and a 62.2% decline from the five-year high of 1,283,000
homes set in 2005; and median new home prices fell from $248,000
to $232,000, reflecting the largest single year-to-year decline
since 1970. In addition, as of December 31, 2008, the
U.S. Census Bureau estimated an 8.8 month supply of
unsold new homes, approximately double the median level since
2000. The outlook for the industry was severely affected by the
crises in the credit markets, which restricted the availability
of financing for home purchases, and the deteriorating
conditions in the economy.
In response, in the fall of 2008, Centex accelerated the actions
that it had begun in 2006 to improve its cost structure through
implementing operational improvements in construction,
purchasing, sales and marketing, minimizing cash expenditures at
all levels, implementing overhead and personnel reductions and
reducing land-related spending. In addition, in the fall of
2008, Centex began a comprehensive analysis of its capital
structure, including with respect to the near-term maturities of
certain of its outstanding indebtedness. During this period, the
board of directors of Centex, which we refer to as the Centex
Board, and Centexs senior management discussed
Centexs strategic alternatives in light of worsening
industry and economic conditions and how to best position Centex
to take advantage of any recovery. In addition, Goldman,
Sachs & Co., which we refer to as Goldman Sachs, and
which had served as a strategic financial advisor to Centex
since 2005, was engaged to assist Centexs consideration of
strategic alternatives, and Wachtell, Lipton, Rosen &
Katz, which we refer to as Wachtell Lipton, was hired as a legal
advisor.
On December 13, 2008, the Centex Board met with
Centexs senior management and its financial advisors to
further discuss Centexs strategic alternatives. At the
meeting, representatives of Goldman Sachs presented a
preliminary analysis of potential strategic alternatives,
including engaging in a business combination transaction or a
recapitalization to strengthen Centexs financial condition
through the private or public sale of equity, repurchase of
debt, a debt-for-debt or debt-for-equity exchange offer or a
combination of the foregoing. The Centex Board directed
Centexs senior management to develop with Goldman Sachs an
analysis of potential merger candidates as well as a
recapitalization plan, and to consider the optimal sequencing of
each alternative. The Centex Board also formed a special
initiatives committee, which we refer to as the Centex Special
Initiatives Committee, comprised of four independent directors,
one of whom served as chair, and Timothy R. Eller, Centexs
chairman and chief executive officer. The mandate of the Special
Initiatives Committee was to assist the Centex Boards
analysis, negotiation and implementation of strategic
alternatives including a business combination or a
recapitalization.
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On several occasions during December and January, the Centex
Special Initiatives Committee met with Centexs senior
management to discuss Centexs business in light of general
industry and economic conditions as well as Centexs
capital structure, including the maturities of Centexs
outstanding indebtedness and the potential desirability of, and
methods for, repurchasing certain tranches of indebtedness,
including with the proceeds of a private or public sale of
equity. The Centex Special Initiatives Committee also discussed
with Centexs senior management more than 10 potential
candidates for a business combination, including the attributes
of the combined companies that would result from such
transactions, if effected.
At a meeting on January 10, 2009, the Centex Board
discussed with Centexs senior management and its legal and
financial advisors Centexs potential strategic
alternatives, including engaging in a potential business
combination transaction or a recapitalization and considered
potential candidates for a business combination. At the meeting,
representatives of Goldman Sachs presented a preliminary
analysis of potential candidates selected by Goldman Sachs and
Centexs senior management on the basis of, among other
factors, the candidates capacity to effect a transaction
that would provide attractive value to Centexs
stockholders, their ability to achieve synergies in a
transaction with Centex, the strength of the balance sheet of
the combined company that would result from such a transaction
and their likely interest in engaging in such a transaction. The
presentation included a preliminary analysis of the balance
sheet and geographic profile of the combined company and
potential synergies identified by Centexs senior
management that might be achieved in a transaction with each of
the potential candidates. After discussion, the Centex Board
identified three homebuilding industry participants as the
preferred business combination partners: Pulte, Company A and
Company B. These companies were selected and certain other
candidates were excluded based on, among other factors, the
Centex Boards assessment of their capacity to effect a
transaction that would provide attractive value to Centexs
stockholders, their ability to achieve synergies in a
transaction with Centex, the strength of the balance sheet of
the combined company that would result from such a transaction
and their likely interest in engaging in such a transaction.
Goldman Sachs did not independently contact prospective
combination partners.
In selecting Pulte as a potential candidate, the Centex Board
considered that Mr. Eller and Pultes then chief
executive officer held preliminary discussions, initiated by
Pultes chief executive officer, regarding a potential
negotiated transaction in 2000 and 2004, which discussions did
not result in either party making an acquisition proposal, and
that, in August 2005, Pulte had made an unsolicited confidential
acquisition proposal to acquire Centex in a stock-for-stock
merger with an exchange ratio of 1.8 shares of Pulte common
stock for each Centex share, which was later increased to 1.85
Pulte shares, and which the Centex Board determined not to
pursue. The Centex Board considered the companies
respective equity values, industry conditions and Centexs
position in the homebuilding industry at the time the proposals
were made, and concluded that Centexs strategic
initiatives had the potential to deliver greater value to
Centexs stockholders than the proposed business
combination with Pulte.
Following further meetings of the Centex Special Initiatives
Committee and the Centex Board and in accordance with the Centex
Boards direction, Mr. Eller initiated contact and
held discussions with the chief executive officers of Pulte,
Company A and Company B during the first week of February 2009.
The Centex Board determined to pursue a potential business
combination transaction with Pulte, Company A and Company B
rather than a potential recapitalization based on the Centex
Boards belief that a business combination transaction with
such parties had the potential to offer Centex stockholders
greater value than a recapitalization. In addition, the Centex
Board believed that the volatility of the debt and equity
securities markets created uncertainty regarding the ability of
Centex to successfully and timely complete a recapitalization
plan, including, for example, to purchase its outstanding debt
securities on favorable terms and to issue new debt
and/or
equity securities. During an initial conversation on
February 4, 2009, with Richard J. Dugas, Jr.,
Pultes president and chief executive officer and a member
of the Pulte board of directors, which we refer to as the Pulte
Board, Mr. Dugas indicated to Mr. Eller that he
believed a combination between the two companies had strategic
merit, and that the two companies should further consider
engaging in a potential transaction. The chief executive officer
of Company A also indicated to Mr. Eller during a
conversation on February 4, 2009, that he would be
interested in discussing a potential transaction, and, at
Mr. Ellers request, the two met in person on
February 13, 2009 together with David W. Quinn, a Centex
director, and a director from Company A. Mr. Eller and
Company As chief executive officer held an
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additional discussion by telephone on February 17, 2009.
Ultimately, Company A determined not to proceed with a further
exploration of a merger with Centex. During an initial
conversation on February 6, 2009, the chief executive
officer of Company B expressed interest in a potential
transaction, and Mr. Eller discussed a potential
transaction with Company Bs chief executive officer again
on February 13, 2009.
The Pulte Board, together with Pulte management, has in the
ordinary course regularly evaluated business development
strategies and reviewed Pultes strategic alternatives,
including from time to time potential business combinations and
other strategic alliances, in pursuing its objective of
enhancing shareholder value. Following the initial discussion
between Mr. Dugas and Mr. Eller, Pulte retained
Citigroup Global Markets Inc., which we refer to as Citi, as
Pultes financial advisor and Sidley Austin LLP, which we
refer to as Sidley Austin, to serve as special counsel to Pulte
and the Pulte Board in connection with the Pulte Boards
consideration of a possible business combination with Centex.
On February 9, 2009, at a regularly scheduled meeting of
the Pulte Board, Mr. Dugas reported on his discussions with
Mr. Eller with respect to a possible business combination
with Centex. Mr. Dugas and Roger A. Cregg, Pultes
executive vice president and chief financial officer, discussed
the strategic rationale for a potential combination with Centex
and the financial profile of the combined company, including the
combined cash balance of the two companies and the pro forma
debt maturity schedule, the potential significant cost synergies
that could result from a business combination with Centex and
the possible risks associated with such a transaction.
Mr. Dugas also informed the Pulte Board that he believed
that Pulte and Centex shared similar philosophies with respect
to business culture, including a commitment to maintain a high
level of customer and employee satisfaction, and a conservative
approach to financial accounting matters. Following the
presentation by Mr. Dugas and Mr. Cregg regarding a
possible business combination with Centex, the Pulte Board
discussed a number of items, including the significant combined
cash balance of the two companies, which the Pulte Board
believed would better position the combined company to navigate
the downturn in the housing industry, the potential significant
cost synergies due to reduced overhead and interest expense
savings that could be achieved in such a transaction, the
complementary nature of the Pulte and Centex businesses given
Pultes strength in the
move-up and
active adult segments of the homebuilding industry and
Centexs strength in the entry-level and
move-up
segments of the homebuilding industry and the potential for
shareholders of both companies to participate in the potential
benefits to be realized from a business combination transaction.
The Pulte Board also discussed the favorable timing for a
potential business combination transaction with Centex given the
recent comparative share price performance between the companies
relative to the companies historical trading prices.
During its discussion, the Pulte Board noted some of the
potential risks associated with a possible business combination
with Centex, with particular focus on the pro forma debt
maturity schedule for the combined company, possible future
goodwill and other asset impairments for the combined company
and the ability to achieve the identified cost synergies. See
Recommendation of the Pulte Board of Directors
and Its Reasons for the Merger beginning on page 45
for additional discussion of the Pulte Boards reasons for
pursuing a business combination with Centex.
The Pulte Board did not consider pursuing potential strategic
alternatives with other companies in the homebuilding industry
and instead primarily focused on whether it was in the best
interests of Pulte and its shareholders to continue to operate
its business as currently conducted or to pursue a potential
business combination with Centex. The Pulte Board decided to
pursue a potential business combination with Centex because it
had viewed a combination with Centex favorably when it last
considered such a transaction in 2005, the information made
available to it, including the Pulte management teams
views of the current status of the homebuilding industry and
Centexs competitive and financial position, suggested that
a combination with Centex at this time would be favorable to
Pulte and its shareholders and completion of a business
combination with Centex would not preclude Pulte from pursuing
other alternatives in the future. In addition, given changes
since 2005 in the companies respective equity values,
industry conditions and the companies respective positions
in the homebuilding industry, the Pulte Board viewed the ability
to pursue a combination with Centex using an exchange ratio that
it expected to be able to negotiate as an attractive opportunity
for Pulte and its shareholders. Based primarily upon the
information presented and the views expressed by Mr. Dugas
and Mr. Cregg at the meeting, the Pulte Board determined
that the potential benefits of a business combination with
Centex outweighed the potential risks identified at the meeting
and authorized Pulte management to pursue discussion of a
possible business combination with Centex.
39
On February 11, 2009, Mr. Dugas contacted
Mr. Eller and reported that the Pulte Board was supportive
of proceeding with discussions concerning a possible business
combination with Centex. Mr. Dugas identified Pultes
concern with Centexs near-term debt maturities and sought
additional information concerning Centexs projected cash
flows during the 2009 calendar year. Mr. Dugas proposed an
in-person meeting between members of Pulte and Centex
managements to conduct due diligence and further discuss
potential cost synergies and how the companies might operate
together.
On February 17, 2009, Centex and Pulte entered into a
confidentiality and standstill agreement to facilitate their
exchange of confidential information and further consideration
of a transaction.
On February 18, 2009, Mr. Dugas and Mr. Eller,
together with Mr. Quinn and other members of Pulte and
Centex senior management, including Mr. Cregg and
Ms. Smith, met to further discuss the combination of Pulte
and Centex. At the meeting, Mr. Dugas presented
Mr. Eller with a term sheet outlining a business
combination, structured as a stock-for-stock merger, in which
Centexs stockholders would receive a premium of 8-10%
based on a fixed exchange ratio, and thereby own approximately
one-third of the combined company. The Pulte Board favored a
proposal featuring a stock-for-stock merger with a fixed
exchange ratio because this transaction structure provided
certainty as to the number of shares of Pulte common stock to be
delivered to Centex stockholders and the percentage of the total
shares of Pulte common stock that current Centex stockholders
would own after the merger. In addition, this transaction
structure would not require Pulte to incur any new debt in order
to effect the business combination. Based on the closing prices
on the NYSE of Centex common stock and Pulte common stock on the
day the term sheet was provided, a premium of 8-10% would have
implied an exchange ratio of approximately 0.876 to 0.892 of a
share of Pulte common stock for each Centex share. As proposed,
the board of directors of the combined company would be
comprised of eleven to thirteen directors, with nine or ten
designated by Pulte and two or three designated by Centex. The
term sheet also contemplated that Pultes and Centexs
directors and officers would enter into customary voting
agreements in support of the transaction. In addition, the
headquarters of the combined company would be based in Detroit,
and the combined company would have a regional headquarters/home
office extension in Dallas.
On February 20, 2009 at a meeting of the Centex Special
Initiatives Committee, Mr. Eller updated committee members
on his discussions with Mr. Dugas and with the chief
executive officers of Company A and Company B. The Centex
Special Initiatives Committee directed Mr. Eller to seek to
improve the exchange ratio and other transaction terms proposed
by Pulte and to continue discussions with Company A and Company
B.
On March 5, 2009, Mr. Dugas and Mr. Eller,
together with Mr. Quinn and other members of Pulte and
Centex senior management, including Mr. Cregg and
Ms. Smith, met to further discuss the combination of Pulte
and Centex. Mr. Eller expressed the Centex Boards
willingness to consider the combination, but only if the
exchange ratio and other terms proposed by Pulte were improved.
During this meeting, the attendees had further discussions
concerning the amount and timing for achievement of the
potential cost synergies, each companys financial
statements and their respective liquidity positions, integration
plans and brand strategy. Mr. Dugas also inquired as to
Mr. Ellers desired role in the combined company, and
Mr. Eller indicated that he and the Centex Board believed
that Mr. Ellers role should not be considered until
agreement had been reached on the principal terms of the
proposed transaction. Acting in accordance with the direction of
the Centex Special Initiatives Committee, Mr. Eller
proposed that Centexs stockholders receive
1.04 shares of Pulte common stock for each share of Centex
common stock and that the board of directors of the combined
company be comprised of ten directors, with seven designated by
Pulte and three designated by Centex.
On March 9, 2009, the Pulte Board met, together with
members of Pulte management and Pultes financial advisor,
to discuss the proposed business combination transaction between
Pulte and Centex. Mr. Dugas updated the Pulte Board on
Pulte managements discussions with Centex management.
Pultes financial advisor discussed with the Pulte Board
financial matters relating to Centex and the proposed business
combination. Mr. Dugas also reviewed a term sheet for the
proposed transaction with the Pulte Board and discussed the
potential role for Mr. Eller in the combined company,
noting Mr. Ellers and the Centex Boards view
that his role should not be considered until agreement had been
reached on the principal terms of the proposed transaction. The
Pulte Board authorized Mr. Dugas to submit the term sheet
to Centex, which included an exchange ratio of 0.90 of a share
of Pulte common stock for each outstanding share of Centex
40
common stock that would be subject to adjustment based on the
relative trading values of Centex common stock and Pulte common
stock at the time of signing a merger agreement.
On March 9, 2009, following the conclusion of the Pulte
Board meeting, Mr. Dugas contacted Mr. Eller and
proposed a business combination in which Centexs
stockholders would receive 0.90 of a share of Pulte common stock
for each share of Centex common stock, subject to adjustment as
described in the preceding paragraph. Mr. Dugas also
proposed that the board of directors of the combined company be
comprised of eleven to thirteen directors, with eight to ten
designated by Pulte and three designated by Centex.
At a meeting of the Centex Special Initiatives Committee held
later on March 9, 2009, Centexs senior management
updated committee members on Centexs business and general
industry and economic conditions, and Mr. Eller reported on
his discussions with Mr. Dugas as well as a discussion with
the chief executive officer of Company A who had informed
Mr. Eller that Company A had decided not to further
consider a transaction with Centex. During this meeting, a
representative of Wachtell Lipton also reviewed with the
directors their fiduciary duties in the context of evaluating
Centexs strategic alternatives. The Centex Special
Initiatives Committee directed Mr. Eller to seek to improve
the exchange ratio and other transaction terms proposed by Pulte
and to make a business combination proposal to Company B, in
each instance on the terms discussed at the meeting.
On March 11, 2009, Mr. Eller met with the chief
executive officer of Company B to further discuss the possible
combination of Company B and Centex. At the meeting,
Mr. Eller proposed that Centex combine with Company B in a
merger of equals in which Centex stockholders would
own approximately 51% of the combined company and Company
Bs stockholders would own approximately 49% of the
combined company. Mr. Eller further proposed that the board
of directors of the combined company would be split equally
between Centex and Company B designees, that Mr. Eller
would be the chief executive officer of the combined company and
that the headquarters of the combined company would be located
in Dallas. Mr. Eller and the chief executive officer of
Company B did not discuss the compensation Mr. Eller would
receive as chief executive officer of the combined company.
On March 13, 2009 at a meeting of the Centex Board attended
by its legal and financial advisors, Centexs senior
management updated the directors on Centexs business and
general industry and economic conditions, and Mr. Eller
reported on his discussions with Mr. Dugas and with the
chief executive officers of Company A and Company B. During this
meeting, a representative of Wachtell Lipton also reviewed with
the directors their fiduciary duties in the context of
evaluating Centexs strategic alternatives, and a
representative of Goldman Sachs discussed with the Centex Board
financial matters relating to a possible business combination
transaction.
On March 15, 2009, Mr. Eller contacted Mr. Dugas
to respond to Pultes March 9 proposal. Mr. Eller
proposed that the exchange ratio be increased to 1.00 share
of Pulte common stock for each share of Centex common stock, and
that this exchange ratio would not be subject to adjustment
based on fluctuations in Pultes and Centexs
respective stock prices prior to execution of a merger
agreement. Mr. Eller further proposed that directors
designated by Pulte would constitute two-thirds of the board of
directors of the combined company and the remaining one-third
would consist of directors designated by Centex.
On March 17, 2009, the chief executive officer of Company B
contacted Mr. Eller to discuss Mr. Ellers March
11 transaction proposal. The chief executive officer of Company
B proposed that, in the merger of equals of their
respective companies, Centexs stockholders and Company
Bs stockholders would each own approximately 50% of the
combined company, neither companys stockholders would
receive a premium, Mr. Eller would be the chief executive
officer of the combined company for two years following the
combination and the combined companys headquarters would
be located in the city of Company Bs headquarters.
On March 17, 2009, the Pulte Board met to discuss the
proposed business combination transaction between Pulte and
Centex. Mr. Dugas updated the Pulte Board on recent
discussions that had taken place with Centex management
regarding the proposed business combination, and Mr. Cregg
provided the board with additional analysis conducted by Pulte
management with respect to Centexs recent financial
results. Mr. Dugas also reviewed a revised term sheet for
the proposed transaction with the Pulte Board, which
contemplated an
41
exchange ratio of 0.95 of a share of Pulte common stock for each
outstanding share of Centex common stock. The Pulte Board
authorized Mr. Dugas to submit the revised term sheet to
Centex.
At a meeting of the Centex Board on March 18, 2009 attended
by its legal and financial advisors, the directors reached a
consensus that a transaction with Pulte had the potential to
offer Centex stockholders greater value than a transaction with
Company B primarily because of the substantial premium to the
trading value of Centex common stock that was expected to be
reflected in any transaction with Pulte. In contrast, any
transaction to be effected with Company B would include little
or no premium based on the equity market capitalization of
Company B and the type of transaction that Centex and Company B
had been discussing. In reaching this consensus, the Centex
Board did not attribute significance to the potential
inconvenience to Centexs employees that could result from
any relocation of Centexs operations, including a
relocation of its headquarters. Thus, while not foreclosing a
potential transaction with Company B, the Centex Board directed
Centexs senior management to focus its efforts primarily
on its negotiations with Pulte and to seek improvement of the
exchange ratio and other transaction terms proposed by Pulte.
On March 18, 2009, Mr. Dugas contacted Mr. Eller,
and in response to Centexs March 15 proposal, proposed a
business combination in which Centexs stockholders would
receive 0.95 of a share of Pulte common stock for each share of
Centex common stock, subject to adjustment at the time of
signing a merger agreement only if the stock prices of Centex
and Pulte fluctuated significantly during the time prior to
signing. Mr. Dugas expressed Pultes willingness to
proceed on the basis that the board of directors of the combined
company be comprised of twelve directors, with eight designated
by Pulte and four designated by Centex. Mr. Dugas also
proposed that Pulte select all of the senior management of the
combined company.
On March 19, 2009, in response to Pultes March 18
proposal and in accordance with the Centex Special Initiatives
Committees direction, Mr. Eller contacted
Mr. Dugas and proposed that Centexs stockholders
receive between 0.95 and 1.00 of a share of Pulte common stock
for each share of Centex common stock, with the exchange ratio
to be determined at the time of signing to result in a 30%
premium to Centexs common stock price based on the prior
days closing. Mr. Eller then expressed Centexs
willingness to proceed on the basis of Pultes proposal
that the combined company be comprised of twelve directors, with
eight designated by Pulte and four designated by Centex, but
proposed that the senior management of the combined company be
determined by a selection committee comprised of two Pulte
representatives and one Centex representative. During a later
call on March 19, Mr. Dugas confirmed Pultes
willingness to proceed on the basis that the senior management
of the combined company be determined by a selection committee
comprised of two Pulte representatives and one Centex
representative.
On March 20, 2009, Ms. Smith and Mr. Cregg
discussed the business outlook of both companies. Following
these discussions, they exchanged financial forecasts for their
respective companys future operating performance. See
Financial Forecasts beginning on page 115.
On March 20, 2009, Mr. Dugas delivered a term sheet to
Mr. Eller proposing a business combination in which
Centexs stockholders would receive between 0.90 and 1.00
of a share of Pulte common stock for each share of Centex common
stock, and that this exchange ratio would be determined at the
time of signing a merger agreement to result in a 25% premium to
Centexs common stock price based on the average trading
prices of Centex and Pultes common stock prior to signing.
Later on March 20, 2009, following a meeting of the Centex
Special Initiatives Committee attended by its legal and
financial advisors, Mr. Eller contacted Mr. Dugas and
proposed two alternative approaches, either of which would be
acceptable to Centex: (1) a 0.975 exchange ratio or
(2) if adjustment of the exchange ratio prior to signing
was critical to the Pulte Board, the adjustment parameters
previously proposed by Centex (i.e., an exchange ratio of
between 0.95 and 1.00 of a share), applied to result in a 30%
premium to Centex stockholders at the time of signing.
Following this call, Mr. Dugas had telephonic discussions
with the other members of the Pulte Board during which he
informed them of the most recent Centex proposal on the exchange
ratio. The Pulte directors authorized Mr. Dugas to proceed
on the basis of a fixed exchange ratio of 0.975 of a share of
Pulte common stock for each outstanding share of Centex common
stock, subject to the completion of confirmatory due
42
diligence investigations of Centex and the negotiation of
definitive documentation to effect the business combination.
Later that evening, Mr. Dugas contacted Mr. Eller to
confirm Pultes willingness to seek to negotiate the
definitive terms of a merger agreement on the basis that Centex
stockholders would receive 0.975 of a share of Pulte common
stock for each outstanding share of Centex common stock.
On March 21, 2009, Mr. Eller updated the Centex Board
on his negotiations with Pulte at a meeting attended by the
Centex Boards legal and financial advisors. The directors
confirmed their support of the principal transaction terms
negotiated by Mr. Eller and directed Mr. Eller and the
other members of Centexs senior management to negotiate
the definitive terms of a merger agreement in accordance with
such terms.
Commencing on March 22, 2009, when Wachtell Lipton
distributed an initial draft merger agreement to Pulte and
Sidley Austin, representatives of Pulte, Sidley Austin, Centex
and Wachtell Lipton negotiated the terms of the merger agreement
and other documents related to the proposed transaction. The key
transaction terms discussed by Pulte and Centex and their
respective legal advisors included the circumstances under which
termination fees would be payable by either party and the
amounts of such termination fees, under what circumstances the
Pulte Board would have the ability to change its recommendation
for the transaction, whether the transaction would be
conditioned on an amendment to Pultes Restated Articles of
Incorporation, the restrictions on Centexs ability to
enter into discussions regarding an alternative transaction
proposal, the definition of Material Adverse Effect
and the interim operating covenants applicable to Centex. During
this period, Pulte and Centex and their respective legal
advisors continued their due diligence investigation of the
other and regularly apprised their respective boards of
directors (and, in the case of Centex, the Centex Special
Initiatives Committee) concerning their diligence findings and
the status of the negotiations of definitive agreements. Also
during this period, Mr. Eller, with the prior approval of
the Centex Special Initiatives Committee, began discussions with
Pulte regarding his role in the combined company and a potential
consulting agreement between Mr. Eller and Pulte to be
effective if a business combination of Centex and Pulte were
consummated. During these discussions, Mr. Eller,
Mr. Dugas and Bernard Reznicek, chairman of the
compensation committee of the Pulte Board, discussed appropriate
terms to ensure that the combined company would continue to have
the benefit of Mr. Ellers knowledge of Centex and its
business following the completion of a transaction.
Mr. Dugas, Mr. Eller and Mr. Reznicek discussed,
among other terms, whether Mr. Eller would report directly
to Mr. Dugas, the length of Mr. Ellers
consulting period, and the payments and benefits to which
Mr. Eller would be entitled as a consultant to the combined
company. The terms of Mr. Ellers consulting
agreement, as executed on April 7, 2009, are described
below under Interests of Centexs Directors and
Executive Officers in the Merger Consulting
Agreement Between Timothy R. Eller and Pulte beginning on
page 73. In addition, on March 31, 2009, Sidley Austin
distributed an initial draft of the form of voting agreement to
be entered into by certain directors and officers of Centex and
Pulte, including William J. Pulte, Pultes founder and
chairman.
On March 26, 2009, the Pulte Board met, together with
members of Pulte management and Pultes legal advisors, to
receive an update on the proposed business combination with
Centex since the prior meeting of the Pulte Board.
Representatives of Sidley Austin reviewed with the Pulte Board
the fiduciary duties of the directors in evaluating the proposed
business combination between Pulte and Centex and reviewed the
principal terms of the draft merger agreement submitted to Pulte
by Centex, and Pultes proposed response to such terms. The
Pulte Board considered the advisability of pursuing a business
combination with Centex and authorized Pulte management to
continue discussions with Centex on the proposed business
combination, including the terms of the draft merger agreement.
On March 27, 28 and 29, 2009, management teams from Pulte
and Centex and their respective auditors and legal and financial
advisors attended mutual in-person due diligence meetings in
Dallas, Texas. During these meetings, the management teams from
Pulte and Centex made presentations about their respective
businesses, discussed how the companies might operate together,
reviewed documents and responded to questions and additional
information requests.
On March 30, 2009 at a meeting of the Centex Special
Initiatives Committee attended by its legal and financial
advisors, Centexs senior management updated the committee
members on their due diligence investigation of Pulte, including
the results of the in-person due diligence meetings held in
Dallas. A
43
representative of Wachtell Lipton also discussed the terms of
the draft merger agreement, including termination fees,
regulatory covenants, closing conditions, fiduciary provisions,
employee benefits provisions and other terms and conditions and
the terms of the proposed voting agreement, and addressed
various other issues and related matters. On April 1, 2009,
the Centex Board also received an update from Centexs
senior management and its legal and financial advisors.
The Pulte Board met on April 3, 2009 and again on
April 6, 2009, together with members of Pultes
management and Pultes legal and financial advisors, to
further consider the proposed business combination with Centex.
During these meetings, Pulte management discussed with the Pulte
Board the due diligence work conducted in contemplation of the
proposed transaction and possible market reaction to the
transaction. The Pulte Board also discussed certain financial
matters, including an overview of the projected cost synergies
estimated by Pulte management to be achieved in connection with
the proposed transaction, the combined companys projected
debt, cash and liquidity using the forecasts prepared by Pulte
management and referred to under Financial Forecasts
on page 115 and the anticipated reaction of the rating
agencies to the proposed transaction. Representatives of Sidley
Austin also reviewed the principal terms of the draft merger
agreement and voting agreements and provided an update on the
status of negotiations of the merger agreement with Centex. The
Pulte Board also discussed the strategic rationale for the
transaction, financial considerations for the combined company,
including the significant increase in debt of the combined
company, and the integration of the two companies after the
closing of the transaction. At the conclusion of these meetings,
the Pulte Board authorized Pultes management to continue
to pursue the proposed transaction. On the evening prior to its
April 3 meeting, the Pulte Board held a dinner which, at the
request of the Pulte Board, was attended by Mr. Eller. At
the dinner, Mr. Eller discussed his views regarding the
strategic rationale for the proposed transaction.
On April 7, 2009, the Pulte Board met, together with
members of Pultes management and Pultes legal and
financial advisors. Pulte management updated the Pulte Board on
the due diligence investigation conducted by Pulte and the
financial matters that were discussed at the April 3 and
April 6, 2009 Pulte Board meetings. Representatives of
Sidley Austin again reviewed the fiduciary duties of the members
of the Pulte Board with respect to the evaluation of the
proposed transaction and provided a summary of the terms of the
proposed merger agreement. Pulte management discussed with the
Pulte Board the principal terms of the consulting agreement with
Mr. Eller, and representatives of Sidley Austin discussed
with the Pulte Board the principal terms of the voting
agreements between Pulte and certain of the directors and
officers of Centex and the voting agreements between Centex and
certain of the directors and officers of Pulte. Citi reviewed
with the Pulte Board its financial analysis of the 0.975
exchange ratio provided for in the merger agreement and rendered
to the Pulte Board an oral opinion, which was confirmed by
delivery of a written opinion dated April 7, 2009, to the
effect that, as of that date and based on and subject to the
matters described in its opinion, the exchange ratio was fair,
from a financial point of view, to Pulte. Pulte management
recommended that the Pulte Board approve the proposed business
combination with Centex and authorize Pultes entry into
the merger agreement. After further consideration and
deliberation, and taking into account the factors described
under Recommendation of the Pulte Board of
Directors and Its Reasons for the Merger beginning on
page 45, the Pulte Board unanimously determined that it was
advisable and in the best interests of Pulte and its
shareholders to enter into a business combination transaction
with Centex and voted for Pulte to enter into the proposed
merger agreement, approved the proposed merger agreement and the
proposed charter amendment to increase the number of authorized
shares of common stock, and determined to recommend to
Pultes shareholders that they vote to approve the proposal
to approve the issuance of shares in the merger and the proposal
to approve the charter amendment to increase the number of
authorized shares of common stock. At this meeting, the Pulte
Board also approved and authorized Pultes entry into the
consulting agreement with Mr. Eller and Pultes entry
into the voting agreements with certain of the directors and
officers of Centex.
On April 7, 2009, the Centex Board held a special meeting,
which was also attended by Centexs senior management and
representatives of Goldman Sachs and Wachtell Lipton, to further
consider the proposed transaction. At the meeting, a
representative of Wachtell Lipton again reviewed the
directors fiduciary duties and described the terms of the
proposed merger agreement, the consulting agreement to be
entered into
44
between Mr. Eller and Pulte and the voting agreements to be
entered into by Pulte and Centex and certain of the other
partys directors and officers, and the representatives of
Goldman Sachs reviewed financial aspects of the proposed
transaction, which analysis was based in part on the closing
prices of Centexs and Pultes common stock on
April 6, 2009. Goldman Sachs then delivered its oral
opinion, which was subsequently confirmed in writing, to the
effect that, as of April 7, 2009 and based upon and subject
to the assumptions and qualifications set forth in the opinion,
the exchange ratio pursuant to the proposed merger agreement was
fair from a financial point of view to the holders of Centex
common stock. At the request of the Centex Board, Mr. Dugas
attended a portion of the meeting to discuss his views regarding
the strategic rationale for the proposed transaction. After
further consideration and deliberation, and taking into account
the factors described under Recommendation of
the Centex Board of Directors and Its Reasons for the
Merger beginning on page 49, the Centex Board
unanimously determined that it was in the best interests of
Centex and its stockholders, and declared it advisable, to enter
into the merger agreement, adopted the merger agreement and
approved the consummation of the transactions contemplated by
the merger agreement, including the merger, and determined to
recommend to Centexs stockholders that they vote to
approve the merger agreement. At this meeting, the Centex Board
also approved Centexs entry into the voting agreements
with certain of the directors and officers of Pulte.
On the evening of April 7, 2009, Pulte, Centex and Pi
Nevada Building Company executed the definitive merger agreement
and certain directors and officers of Centex and Pulte entered
into the voting agreements. In addition, Pulte and
Mr. Eller entered into Mr. Ellers consulting
agreement. On April 8, 2009, before the opening of trading
on the NYSE, Pulte and Centex issued a joint press release
announcing the execution of the Merger Agreement. The terms of
the Merger Agreement are described below under The Merger
Agreement beginning on page 75.
Recommendation
of the Pulte Board of Directors and Its Reasons for the
Merger
The Pulte Board has unanimously approved the Merger Agreement
and unanimously recommends that Pulte shareholders vote
FOR the proposal to approve the charter amendment to
increase the number of authorized shares of common stock,
FOR the proposal to approve the issuance of shares
in the merger, FOR the proposal to approve the
charter amendment to change Pultes corporate name and
FOR the Pulte meeting adjournment proposal.
In evaluating the merger and Merger Agreement, the Pulte Board
consulted with Pultes management and legal and financial
advisors and, in reaching its decision to approve the Merger
Agreement and to recommend that Pulte shareholders vote
FOR the proposal to approve the charter amendment to
increase the number of authorized shares of common stock and
FOR the proposal to approve the issuance of shares
in the merger, the Pulte Board evaluated the results of
managements due diligence investigation of Centexs
businesses and operations, reviewed publicly available
information regarding Centexs businesses and operations
and considered various factors, including the factors described
below. The following discussion of the information and factors
considered by the Pulte Board is not exhaustive, but includes
the material factors considered by the Pulte Board. In view of
the wide variety of factors considered by the Pulte Board in
connection with its evaluation of the merger, the Pulte Board
did not consider it practical to, nor did it attempt to,
quantify, rank or otherwise assign relative weights to the
specific factors that it considered in reaching its decision. In
considering the factors described below, individual members of
the Pulte Board may have given different weight to different
factors. The Pulte Board considered this information as a whole,
and overall considered the information and factors to be
favorable to, and in support of, its determinations and
recommendations. Among the material information and factors
considered by the Pulte Board were the following:
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The Pulte Board reviewed Pultes position in the
homebuilding industry and believes that a combination with
Centex would create the nations preeminent homebuilder,
including a number one ranking in terms of revenues and number
of home closings. The Pulte Board discussed that a business
combination with Centex would create a combined company with a
top three position in 25 of the top 50 new homebuilder
geographic markets across the United States and have the ability
to
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increase market share in a number of additional geographic
markets where both companies currently operated. The Pulte Board
further considered the recent and continuing challenges faced by
the homebuilding industry, including lack of consumer
confidence, decreased housing affordability, rising
unemployment, a significant increase in the number of foreclosed
homes, and large supplies of resale and new home inventories and
the uncertain prospects and timing for a recovery.
Notwithstanding the fact that the proposed business combination
with Centex would increase Pultes exposure to the
homebuilding industry and result in possible additional
impairments to the combined companys assets, the Pulte
Board determined that Pulte would have an opportunity to be
well-positioned after a combination to take advantage of the
market for new homes when the homebuilding industry eventually
recovers, particularly in light of the potential synergies
resulting from the combination, the complementary market
segments and geographies in which the additional land inventory
being acquired would be located, the fact that a significant
portion of the inventory reflected developed lots that would not
require substantial additional infrastructure investment to
drive revenue and the fact that the accounting treatment of
recording that inventory at fair value in connection with the
combination would reduce the potential for additional
impairments with respect to the inventory acquired as part of
the combination.
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The Pulte Board considered the similar management styles and
comparable corporate cultures of the two companies and believed
that such similarities would allow the companies to more easily
and quickly integrate their operations. The Pulte Board
acknowledged that there are challenges inherent in the
combination of two business enterprises of the size and scope of
Pulte and Centex, including the possible resulting diversion of
management attention for an extended period and the possibility
of not achieving cost synergies following the merger, including
the ability to successfully repurchase the outstanding debt of
the combined company, in the amounts or at the time anticipated,
and evaluated these risks in light of Pultes history and
experience in integrating businesses in prior significant
transactions, including the acquisition of Del Webb in 2001.
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The Pulte Board considered that, although no assurances could be
given that any particular level of cost synergies would be
achieved following the merger, management of Pulte had
quantified significant potential cost synergies in the principal
areas of corporate overhead, field and divisional overhead,
financial services and cash interest savings, estimated to be
approximately $350 million on an annual basis, and
identified additional potential cost synergies that could not
readily be quantified. The Pulte Board believed that the
likelihood of achieving the estimated cost synergies was high
and did not believe that it would be possible for Pulte to
achieve cost savings in an amount approaching these estimated
synergies if Pulte continued to operate as a standalone company.
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The Pulte Board considered the trends and competitive
developments in the homebuilding industry and the range of
strategic alternatives available to Pulte, including continuing
to operate its business as currently conducted, and
managements recommendation in favor of the merger and its
perspective that Centex was the best merger partner for Pulte in
the homebuilding industry. The Pulte Board determined that the
combined company would have more substantial financial and
management resources to address the challenges facing the
homebuilding industry and the larger combined capitalization
would provide shareholders of the combined company with greater
liquidity for their shares.
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Opportunity for Growth Through Expanded Geographic and Brand
and Customer Segment Diversity. The Pulte Board considered
the complementary nature of the Pulte and Centex businesses,
with a particular emphasis on the opportunity to diversify
Pultes geographic and brand and customer segment presence
by combining the two companies. The Pulte Board believed that
the geographic strength of Centex in Texas and the Coastal
Carolinas would complement the geographic strength of Pulte in
the Florida and Southwest markets. The Pulte Board also noted
the significant brand and customer presence of both Pulte and
Centex in the
move-up
segment of the homebuilding industry, Pultes strength in
the active adult segment of the homebuilding industry through
its Del Webb brand and the opportunity to expand Pultes
presence in the entry level segment of the homebuilding industry
based on Centexs relative strength in that customer
segment.
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Financial Considerations for Combined
Company. The Pulte Board considered the projected
financial position, cost structure and capitalization structure
of the combined company and the anticipated financial benefits
that are expected to result from the merger, including the
potential for an accelerated path to profitability based
primarily upon the opportunity of the combined company to
achieve annual cost synergies of approximately $350 million
and a stronger liquidity position relative to other participants
in the homebuilding industry based primarily upon the
significant amount of cash that would be held by the combined
company (approximately $3.5 billion as of March 31,
2009) which should allow the combined company to retire a
significant amount of debt and allow the combined company to
better mitigate uncertainty regarding the future prospects of
the homebuilding industry.
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The Pulte Board examined various debt repayment scenarios for
the combined company. During the course of this review, the
Pulte Board reviewed and discussed a number of items, including
the following:
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Pultes long-term debt outstanding as of December 31,
2008 was approximately $3.2 billion, but immediately after
the merger, the principal outstanding of the combined
companys debt was anticipated to be approximately
$6.2 billion;
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As of December 31, 2008, Pultes debt service
obligations, comprised of scheduled maturities of principal and
interest, during the next twelve months were anticipated to be,
in the absence of the merger, approximately $234 million,
and on a pro forma basis and based on assumed interest rates,
leverage ratios and credit ratings, and assuming the merger was
completed on July 1, 2009, the combined companys debt
service obligations, comprised of scheduled maturities of
principal and interest, during the twelve months following the
merger were anticipated to be approximately $627 million;
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The anticipated use of the combined companys cash to
retire in excess of $1 billion of debt prior to the end of
2009, which the Pulte Board expected would be disproportionately
weighted toward the retirement of debt with near-term maturities;
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The risks of the type and nature noted under Risk
Factors The combined company will have more
indebtedness after the merger, which could adversely affect its
cash flows and business beginning on page 19;
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The difficulty that Centex would potentially have with
refinancing all or a portion of its maturing debt in the near
term;
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The fact that a significant portion of the Centex debt had been
investment grade debt at the time of issuance with relatively
low interest rates and flexible covenants;
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A report from Pulte management based on preliminary discussions
with the rating agencies and the implications of potential
rating agency actions for the combined company;
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The amendments to Pultes unsecured revolving credit
facility in 2007 and 2008 which, among other things, decreased
the borrowing capacity from $2.01 billion to
$1.2 billion, extended the maturity date from October 2010
to June 2012, adjusted the required tangible net worth minimum,
increased the maximum allowed
debt-to-total
capitalization ratio and increased the costs of borrowing or
issuing letters of credit, and required Pulte to maintain
certain liquidity reserve accounts in the event Pulte fails to
satisfy an interest coverage test. While the Pulte Board
believed that the anticipated retirement of in excess of
$1 billion of debt would significantly reduce the risk of
debt covenant non-compliance by the combined company in the near
term, the Pulte Board also discussed the ability to have
discussions with Pultes lenders and obtain additional
amendments to Pultes unsecured revolving credit facility
if necessary following the completion of the merger to ensure
compliance with applicable financial covenants; and
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The Pulte liquidity-case forecasts and the Centex liquidity-case
forecasts which were prepared by Pulte management to assist the
Pulte Board in its evaluation of the combined companys
ability to service its debt obligations in the event of a more
sustained downturn in the homebuilding industry. See
Financial Forecasts beginning on page 115.
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In addition to the items described above, the Pulte Board
evaluated the historical financial condition, operating results
and businesses of Pulte and Centex, including information with
respect to the respective earnings history and performance of
the companies over the past several years. The Pulte Board also
took into account the detailed financial, pro forma and other
information with respect to the merger presented by Pultes
management. Notwithstanding the increased amount of debt that
the combined company would have and the other potential risks
and considerations noted above, the Pulte Board believed that
the combined company would be able to service its maturing debt
obligations and comply with the financial covenants applicable
to such debt.
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Financial Terms of Transaction. The Pulte
Board reviewed the use of Pulte common stock as the
consideration to be paid to Centex stockholders in the merger
and noted that this transaction structure would not require
Pulte to incur any new debt to consummate the merger. The Pulte
Board considered the fact that the fixed exchange ratio provides
certainty as to the number of shares of Pulte common stock to be
delivered to Centex stockholders and the percentage of the total
shares of Pulte common stock that current Centex stockholders
will own after the merger. The Pulte Board took note of the
historical and current market prices of Pulte common stock and
Centex common stock and the course of negotiations in
determining the exchange ratio.
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Opinion of Pultes Financial Advisor. The
Pulte Board considered Citis financial presentation and
its opinion, dated April 7, 2009, to the Pulte Board as to
the fairness, from a financial point of view and as of the date
of the opinion, to Pulte of the 0.975 exchange ratio provided
for in the Merger Agreement, as more fully described below. See
Opinion of Pultes Financial
Advisor beginning on page 51.
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Terms of the Merger Agreement. The Pulte
Board, with the assistance of its legal advisors, also
considered the non-financial terms and conditions of the Merger
Agreement, including the amounts of the termination fees payable
by Centex and Pulte and the circumstances under which those fees
would be payable, the circumstances under which the Centex Board
could change its recommendation to the Centex stockholders, the
provisions regarding the selection of the board members and
senior management of the combined company and the provisions
relating to employee compensation and benefits.
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Likelihood of Completion of the Merger. The
Pulte Board considered the likelihood that the merger would be
completed and determined that it was relatively high given the
limited regulatory approvals that needed to be obtained in
connection with the proposed transaction and the Pulte
Boards belief that the transaction would be viewed
favorably by both Pulte shareholders and Centex stockholders
because they would each participate in the potential value
creation of the combined company and have greater liquidity for
their shares.
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In addition to the risks noted above, the Pulte Board also
identified and considered other potential risks of the merger,
including the following:
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the reaction of Centex employees to the merger and the risk
that, despite the efforts of the combined company, key personnel
might not remain employed by Pulte;
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the possibility that the merger might not be completed due to
difficulties in obtaining the requisite Centex stockholder
approval of the merger or the requisite Pulte shareholder
approval of the proposal to approve the charter amendment to
increase the number of authorized shares of common stock and the
proposal to approve the issuance of shares in the merger;
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the effect of the public announcement of the Merger Agreement on
Pultes stock price if Pulte shareholders perceived that
Pulte was paying too high a price for Centex or if shareholders
were concerned about the amount of debt of the combined company
or other concerns; and
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other risks associated with Centexs business generally
that were raised during due diligence presentations made by
Pulte management to the Pulte Board.
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The Pulte Board concluded that these risks could be managed or
mitigated by Pulte or were unlikely to have a material impact on
the merger or Pulte, and that, overall, the potentially negative
factors or risks
48
associated with the merger were outweighed by the potential
benefits of the merger to Pulte and its shareholders.
Additional factors considered by the Pulte Board included:
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the fact that Pulte shareholders will have an opportunity to
vote on the proposal to approve the charter amendment to
increase the number of authorized shares of common stock and the
proposal to approve the issuance of shares in the merger;
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the fact the Pulte Board has the right under the Merger
Agreement to withdraw its recommendation to Pulte shareholders
that they approve the proposal to approve the charter amendment
to increase the number of authorized shares of common stock and
the proposal to approve the issuance of shares in the merger if
they are required to do so by applicable law; and
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the terms and conditions of the consulting agreement between
Pulte and Timothy R. Eller, Centexs chairman and chief
executive officer, that will become effective upon completion of
the merger.
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The Pulte Board realized that there can be no assurance about
future results, including results considered or expected as
described in the factors listed above, such as assumptions
regarding potential cost synergies. The explanation of the Pulte
Boards reasoning and all other information presented in
this section are forward-looking in nature and, therefore,
should be read in light of the factors discussed under the
heading Cautionary Statement Concerning Forward-Looking
Statements.
Recommendation
of the Centex Board of Directors and Its Reasons for the
Merger
The Centex Board has unanimously adopted the Merger Agreement
and approved the consummation of the transactions contemplated
by the Merger Agreement, including the merger, upon the terms
and subject to the conditions set forth in the Merger Agreement
and unanimously recommends that Centexs stockholders vote
FOR the proposal to approve the Merger Agreement at
the Centex special meeting.
In reaching this decision, the Centex Board consulted with
Centexs management and its legal and financial advisors
and considered a variety of factors, including the following
material factors, among others:
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the financial terms of the merger achieved through extensive,
arms-length negotiations with Pulte, including the right
of Centex stockholders to receive, for each share of Centex
common stock held by them, 0.975 of a share of Pulte common
stock, which represented an implied market value of
$10.50 per share of Centex common stock and a premium of
approximately 36%, in each case based on the closing prices on
the NYSE of Centex and Pulte common stock on April 7, 2009
(the last trading day prior to the execution and announcement of
the Merger Agreement);
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the financial analyses presented by Goldman Sachs to the Centex
Board, and the opinion of Goldman Sachs dated as of
April 7, 2009 to the effect that, as of that date, and
subject to and based upon the factors and assumptions set forth
in such opinion, the exchange ratio pursuant to the Merger
Agreement was fair from a financial point of view to the holders
of Centex common stock;
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the expectation that Centex stockholders will have the
opportunity to share in the future growth and expected synergies
of the combined company through the continued ownership of
shares of Pulte common stock, while retaining the flexibility of
selling all or a portion of those shares for cash at any time.
The synergies considered by the Centex Board included cost
savings achieved by reductions in public company related
expenses, financial services operations, corporate overhead and
advertising and marketing as well as personnel reduction;
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the strength of the balance sheet of the combined company, the
belief that a combination with Pulte would better enable Centex
to weather the current economic downturn and position the Centex
business (as part of the combined company) to take advantage of
any recovery, and the potential strategic and operational
benefits of the merger identified by Centexs management
and Pultes management, including the complementary nature
of the businesses of Centex and Pulte, and the opportunity for
cost
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savings as a combined company; in view of these considerations,
the Centex Board believed that the merger would further enhance
the leading role of the Centex business in the homebuilding
industry, due to the benefits of the increased scale, diversity
and resources of the combined company;
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its assessment of the likelihood that the merger would be
completed in a timely manner, including its view of the
likelihood the regulatory approvals required in connection with
the merger would be received in a timely manner and without
unacceptable conditions, and that the management team of the
combined company would be able to successfully integrate and
operate the businesses of the combined company after the merger;
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the fact that Centex had conducted discussions with Company A
and Company B, which the Centex Board considered to be the
companies other than Pulte most likely to offer a transaction
that would provide attractive value to Centexs
stockholders (based on, among other factors, the Centex
Boards assessment of their capacity to effect a
transaction, their ability to achieve synergies in a transaction
with Centex, the strength of the balance sheet of the combined
company that would result from such a transaction and their
likely interest in engaging in such a transaction), and that the
Merger Agreement enables the Centex Board, in accordance with
the applicable provisions, to consider unsolicited proposals and
to terminate the Merger Agreement and accept a superior proposal
prior to Centex stockholder approval of the Merger Agreement,
subject to payment of a termination fee;
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the fact that the transaction will be subject to the approval of
Centexs stockholders; and
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presentations by Centexs management concerning the
operations, financial condition and prospects of Centex and its
review of other potential strategic transactions, including its
discussions with Company A and Company B, and its consideration
of a recapitalization and its belief as a result of such review
that the merger with Pulte represents the most attractive
direction for Centexs business, such merger being expected
to enhance and expand Centexs present business and future
growth.
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The Centex Board was also aware of and considered the following
adverse factors associated with the proposed merger, among
others:
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the risk that the expected synergies and other benefits of the
merger might not be fully achieved or may not be achieved within
the time frames expected;
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the risks of the type and nature described under Risk
Factors beginning on page 19;
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the possibility that regulatory or governmental authorities
might seek to impose conditions on or otherwise prevent or delay
the merger (and that the merger may not be completed as a result
of conditions imposed by regulatory authorities or otherwise)
balanced by the fact that Pulte had agreed to assume certain
regulatory approval risks for the proposed transaction;
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the requirement that Centex pay a termination fee equal to
(1) $24 million if Pulte or Centex were to terminate
the Merger Agreement due to the failure to obtain approval of
Centexs stockholders following a favorable recommendation
by the Centex Board and (2) $48 million under certain
circumstances, including if Pulte were to terminate the Merger
Agreement following a change of recommendation by the Centex
Board or if Centex were to terminate the Merger Agreement in
light of a superior proposal (see The Merger
Agreement Termination of the Merger
Agreement Termination Fees beginning on
page 89);
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the fact that some of Centexs directors and executive
officers may have interests in the merger and arrangements that
are different from, or in addition to, those of Centex
stockholders generally, including as a result of compensation
arrangements with Centex and the manner in which they would be
affected by the merger (see Interests of
Centexs Directors and Executive Officers in the
Merger beginning on page 70);
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the possibility that the merger might not be completed if
Centexs stockholders fail to approve the proposal to
approve the Merger Agreement or if the Pulte shareholders fail
to approve the proposal to approve the charter amendment to
increase the number of authorized shares of common stock or the
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proposal to approve the issuance of shares in the merger or if
the parties otherwise fail to satisfy the conditions to
completion of the merger;
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that Centexs customers, suppliers or distributors may seek
to modify or terminate existing agreements or arrangements, or
that they or land sellers would be hesitant to enter into new
agreements or arrangements, as a result of the announcement of
the merger; and
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the potential impact of the restrictions under the Merger
Agreement on Centexs ability to take certain actions
during the period prior to the completion of the merger (which
may delay or prevent Centex from undertaking business
opportunities that may arise pending completion of the merger),
the potential for diversion of management and employee attention
and for increased employee attrition, or difficulty in
attracting new employees, during that period and the potential
effect of these on Centexs business and relations with
customers and service providers.
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The foregoing discussion of the factors considered by the Centex
Board is not intended to be exhaustive, but rather includes
material factors considered by the Centex Board. In reaching its
decision to approve the Merger Agreement, the merger and the
other transactions contemplated by the Merger Agreement, the
Centex Board did not quantify or assign any relative weights to
the factors considered, and individual directors may have given
different weights to different factors. The Centex Board
considered all these factors as a whole, including discussions
with, and questioning of, Centex management and Centexs
financial and legal advisors, and overall considered the factors
to be favorable to, and to support, its determination.
Opinion
of Pultes Financial Advisor
Pulte has retained Citi as its financial advisor in connection
with the merger. In connection with this engagement, Pulte
requested that Citi evaluate the fairness, from a financial
point of view, to Pulte of the 0.975 exchange ratio provided for
in the Merger Agreement. On April 7, 2009, at a meeting of
Pultes board of directors held to evaluate the merger,
Citi rendered to Pultes board of directors an oral
opinion, which was confirmed by delivery of a written opinion
dated April 7, 2009, to the effect that, as of that date
and based on and subject to the matters described in its
opinion, the exchange ratio was fair, from a financial point of
view, to Pulte.
The full text of Citis written opinion, dated
April 7, 2009, which describes the assumptions made,
procedures followed, matters considered and limitations on the
review undertaken, is attached to this joint proxy
statement/prospectus as Annex B and is incorporated into
this joint proxy statement/prospectus by reference.
Citis opinion was provided to Pultes board of
directors in connection with its evaluation of the exchange
ratio from a financial point of view to Pulte and does not
address any other aspects or implications of the merger or the
underlying business decision of Pulte to effect the merger, the
relative merits of the merger as compared to any alternative
business strategies that might exist for Pulte or the effect of
any other transaction in which Pulte might engage. Citis
opinion is not intended to be and does not constitute a
recommendation to any securityholder as to how such
securityholder should vote or act on any matters relating to the
proposed merger.
In arriving at its opinion, Citi:
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reviewed the Merger Agreement;
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held discussions with certain senior officers, directors and
other representatives and advisors of Pulte and certain senior
officers and other representatives and advisors of Centex
concerning the businesses, operations and prospects of Pulte and
Centex;
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reviewed certain publicly available business and financial
information relating to Pulte and Centex;
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reviewed certain financial forecasts, referred to in this joint
proxy statement/prospectus as the Centex strategic-case
forecasts and the Pulte strategic-case forecast, and other
information and data relating to Pulte and Centex which were
provided to or discussed with Citi by Pultes management,
including information relating to potential strategic
implications and operational benefits (including the amount,
timing and achievability thereof) anticipated by Pultes
management to result from the merger;
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51
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reviewed the financial terms of the merger as set forth in the
Merger Agreement in relation to, among other things, current and
historical market prices and trading volumes of Pulte common
stock and Centex common stock, Pultes and Centexs
historical and projected earnings and other operating data and
Pultes and Centexs capitalization and financial
condition;
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analyzed certain financial, stock market and other publicly
available information relating to the businesses of other
companies whose operations Citi considered relevant in
evaluating those of Pulte and Centex;
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considered, to the extent publicly available, the financial
terms of certain other transactions which Citi considered
relevant in evaluating the merger;
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evaluated certain potential pro forma financial effects of the
merger on Pulte utilizing, among other things, the financial
forecasts and estimates relating to Pulte and Centex referred to
above after giving effect to the potential strategic
implications and operational benefits anticipated by
Pultes management to result from the merger; and
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conducted such other analyses and examinations and considered
such other information and financial, economic and market
criteria as Citi deemed appropriate in arriving at its opinion.
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In rendering its opinion, Citi assumed and relied, without
independent verification, upon the accuracy and completeness of
all financial and other information and data publicly available
or provided to or otherwise reviewed by or discussed with Citi
and upon the assurances of the managements of Pulte and Centex
that they were not aware of any relevant information that was
omitted or remained undisclosed to Citi. With respect to
financial forecasts and other information and data provided to
or otherwise reviewed by or discussed with Citi relating to
Pulte and Centex and potential pro forma financial effects of,
and strategic implications and operational benefits resulting
from, the merger, Citi was advised by Pultes management,
and Citi assumed, with Pultes consent, that the forecasts
and other information and data were reasonably prepared on bases
reflecting the best currently available estimates and judgments
of Pultes management as to the future financial
performance of Pulte and Centex, such strategic implications and
operational benefits and the other matters covered thereby. Citi
also assumed, with Pultes consent, that the financial
results (including the potential strategic implications and
operational benefits anticipated to result from the merger)
reflected in such financial forecasts and other information and
data will be realized in the amounts and at the times projected.
Citi assumed, with Pultes consent, that the merger would
be consummated in accordance with its terms without waiver,
modification or amendment of any material term, condition or
agreement, and that, in the course of obtaining the necessary
regulatory or third party approvals, consents, releases and
waivers for the merger, no delay, limitation, restriction or
condition would be imposed that would have an adverse effect on
Pulte, Centex or the contemplated benefits of the merger. Citi
also assumed, with Pultes consent, that the merger would
qualify for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Internal
Revenue Code. Citis opinion relates to the relative values
of Pulte and Centex. Citi did not express any opinion as to what
the value of Pulte common stock actually would be when issued
pursuant to the merger or the prices at which Pulte common stock
or Centex common stock would trade at any time. Citi did not
make, and it was not provided with, an independent evaluation or
appraisal of the assets or liabilities, contingent or otherwise,
of Pulte or Centex, and Citi did not make any physical
inspection of the properties or assets of Pulte or Centex. Citi
expressed no view as to, and its opinion did not address, the
underlying business decision of Pulte to effect the merger, the
relative merits of the merger as compared to any alternative
business strategies that might exist for Pulte or the effect of
any other transaction in which Pulte might engage. Citis
opinion did not address any terms (other than the exchange ratio
to the extent expressly specified in the opinion) or other
aspects or implications of the merger, including, without
limitation, the form or structure of the merger or any other
agreement, arrangement or understanding to be entered into in
connection with or contemplated by the merger or otherwise. Citi
expressed no view as to, and its opinion did not address, the
fairness (financial or otherwise) of the amount or nature or any
other aspect of any compensation to any officers, directors or
employees of any parties to the merger, or any class of such
persons, relative to the exchange ratio. Citis opinion was
necessarily based on information available to Citi, and
financial, stock market and other conditions and circumstances
existing and disclosed to Citi, as of the date of its opinion.
The
52
credit, financial and stock markets are experiencing unusual
volatility, and Citi expressed no opinion or view as to any
potential effects of such volatility on Pulte, Centex or the
contemplated benefits of the merger. Although subsequent
developments may affect its opinion, Citi does not have any
obligation to update, revise or reaffirm its opinion. Except as
described above, Pulte imposed no other instructions or
limitations on Citi with respect to the investigations made or
procedures followed by Citi in rendering its opinion.
In preparing its opinion, Citi performed a variety of financial
and comparative analyses, including those described below. The
summary of these analyses is not a complete description of the
analyses underlying Citis opinion. The preparation of a
financial opinion is a complex analytical process involving
various determinations as to the most appropriate and relevant
methods of financial analysis and the application of those
methods to the particular circumstances and, therefore, a
financial opinion is not readily susceptible to summary
description. Citi arrived at its ultimate opinion based on the
results of all analyses undertaken by it and assessed as a
whole, and did not draw, in isolation, conclusions from or with
regard to any one factor or method of analysis for purposes of
its opinion. Accordingly, Citi believes that its analyses must
be considered as a whole and that selecting portions of its
analyses and factors or focusing on information presented in
tabular format, without considering all analyses and factors or
the narrative description of the analyses, could create a
misleading or incomplete view of the processes underlying its
analyses and opinion.
In its analyses, Citi considered industry performance, general
business, economic, market and financial conditions and other
matters existing as of the date of its opinion, many of which
are beyond the control of Pulte and Centex. No company, business
or transaction used in those analyses as a comparison is
identical to Pulte, Centex or the merger, and an evaluation of
those analyses is not entirely mathematical. Rather, the
analyses involve complex considerations and judgments concerning
financial and operating characteristics and other factors that
could affect the acquisition, public trading or other values of
the companies, business segments or transactions analyzed.
Accordingly, such analyses may not necessarily utilize all
companies or transactions that could be deemed comparable to
Pulte, Centex or the merger.
The estimates contained in Citis analyses and the
valuation ranges resulting from any particular analysis are not
necessarily indicative of actual values or predictive of future
results or values, which may be significantly more or less
favorable than those suggested by its analyses. In addition,
analyses relating to the value of businesses or securities do
not necessarily purport to be appraisals or to reflect the
prices at which businesses or securities actually may be sold.
Accordingly, the estimates used in, and the results derived
from, Citis analyses are inherently subject to substantial
uncertainty.
The type and amount of consideration payable in the merger was
determined through negotiations between Pulte and Centex and the
decision to enter into the Merger Agreement was solely that of
Pultes board of directors. Citis opinion was only
one of many factors considered by Pultes board of
directors in its evaluation of the merger and should not be
viewed as determinative of the views of Pultes board of
directors or management with respect to the merger or the
exchange ratio.
The following is a summary of the material financial analyses
presented to Pultes board of directors in connection with
Citis opinion. The financial analyses summarized below
include information presented in tabular format. In order to
fully understand Citis financial analyses, the tables must
be read together with the text of each summary. The tables alone
do not constitute a complete description of the financial
analyses. Considering the data below without considering the
full narrative description of the financial analyses, including
the methodologies and assumptions underlying the analyses, could
create a misleading or incomplete view of Citis financial
analyses.
Selected
Public Companies Analysis
Citi performed separate selected publicly traded companies
analyses of Pulte and Centex in which Citi reviewed publicly
available financial and stock market information for Pulte,
Centex and the following nine selected publicly traded
companies. These companies were selected generally because they
are publicly-traded
53
companies in the U.S. homebuilding industry (which is the
industry in which Pulte and Centex operate) and were not viewed
as distressed companies:
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D.R. Horton, Inc.
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KB Home
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Lennar Corporation
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M.D.C. Holdings, Inc.
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Meritage Homes Corporation
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NVR, Inc.
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Orleans Homebuilders, Inc.
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The Ryland Group, Inc.
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Toll Brothers, Inc.
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Citi reviewed, among other things, the equity values of the
selected companies, Pulte and Centex, based on closing stock
prices on April 3, 2009, as a multiple of book value as of
the selected companies latest public filings. Financial
data of Pulte, Centex and the selected public companies were
based on public filings and other publicly available
information. Citi then applied a range of selected book value
multiples derived from the selected companies and Centex to
Pultes book value of equity as of December 31, 2008
and a range of selected book value multiples derived from the
selected companies and Pulte to Centexs book value of
equity as of December 31, 2008. This indicated an implied
per share equity reference range for Pulte of approximately
$10.50 to $12.50 per share and for Centex of approximately $8.50
to $10.50 per share (the closing price of Pulte common stock on
April 3, 2009 was $11.54 per share and the implied merger
consideration based on the exchange ratio provided for in the
Merger Agreement and the closing price of Pulte common stock on
April 3, 2009 was approximately $11.25 per share). Based on
the implied per share equity reference ranges derived for Pulte
and Centex, this analysis indicated the following implied
exchange ratio reference range, as compared to the exchange
ratio provided for in the Merger Agreement:
|
|
|
Implied Exchange Ratio Reference Range
|
|
Exchange Ratio
|
|
0.67 - 1.02
|
|
0.975
|
Selected
Precedent Transactions Analysis
Citi performed a selected precedent transactions analysis of
Centex in which Citi reviewed, to the extent publicly available,
financial information relating to the following 13 selected
transactions. These transactions
54
were selected generally because they involve companies in the
U.S. homebuilding industry (which is the industry in which
Centex operates):
|
|
|
|
|
Announcement Date
|
|
Acquiror
|
|
Target
|
|
6/6/05
|
|
Technical Olympic USA, Inc.
|
|
Transeastern Properties, Inc. (homebuilding
operations and assets)
|
4/9/02
|
|
Newmark Homes Corporation
|
|
Engle Holdings Corporation
|
1/30/02
|
|
Beazer Homes USA, Inc.
|
|
Crossmann Communities, Inc.
|
12/19/01
|
|
Hovnanian Enterprises, Inc.
|
|
The Forecast Group, L.P. (California homebuilding
operations)
|
10/23/01
|
|
D.R. Horton, Inc.
|
|
Schuler Homes, Inc.
|
5/1/01
|
|
Pulte
|
|
Del Webb Corporation
|
10/12/00
|
|
Technical Olympic S.A.
|
|
Engle Homes, Inc.
|
9/12/00
|
|
Schuler Homes, Inc.
|
|
Western Pacific Housing
|
2/17/00
|
|
Lennar Corporation
|
|
U.S. Home Corporation
|
10/4/99
|
|
Technical Olympic S.A.
|
|
Newmark Homes Corporation
|
10/20/98
|
|
Kaufman and Broad Home Corporation
|
|
Lewis Homes
|
12/19/97
|
|
D.R. Horton, Inc.
|
|
Continental Homes Holding Corp.
|
6/11/97
|
|
Lennar Corporation
|
|
Pacific Greystone Corporation
|
Citi reviewed, among other things, transaction values,
calculated as the equity value implied for the target company
based on the consideration payable in the selected transaction,
as a multiple of the target companys book value of equity
as of the most recent accounting period prior to public
announcement of the relevant transaction. Financial data of
Pulte, Centex and the selected transactions were based on public
filings and other publicly available information. Citi then
applied a range of selected book value multiples derived from
the selected transactions to Centexs book value of equity
as of December 31, 2008. This indicated an implied per
share equity reference range for Centex of approximately $13.25
to $18.50 per share (the implied merger consideration based on
the exchange ratio provided for in the Merger Agreement and the
closing price of Pulte common stock on April 3, 2009 was
approximately $11.25 per share). Based on the implied per share
equity reference range derived for Centex and Pultes
closing share price as of April 3, 2009, this analysis
indicated the following implied exchange ratio reference range,
as compared to the exchange ratio provided for in the Merger
Agreement:
|
|
|
Implied Exchange Ratio Reference Range
|
|
Exchange Ratio
|
|
1.15 - 1.60
|
|
0.975
|
Discounted
Cash Flow Analysis
Citi performed separate discounted cash flow analyses of Pulte
and Centex to calculate the estimated present value of the
standalone unlevered, after-tax free cash flows that each of
Pulte and Centex was forecasted to generate during fiscal years
2009 through 2017. Based on internal estimates of Pultes
management for Pulte and Centex, including the Pulte
strategic-case forecasts and Centex strategic-case forecasts,
and historical financial results for Pulte and Centex,
unlevered, after-tax free cash flows were calculated as
estimated adjusted earnings before interest and taxes, referred
to as adjusted EBIT, plus depreciation and amortization, less
capital expenditures and adjustments for changes in working
capital. In the case of Centex, Citi performed this analysis
both with and without taking into account potential strategic
implications and operational benefits anticipated by
Pultes management to result from the merger, referred to
as potential synergies. Estimated terminal values for Pulte and
Centex were calculated by applying to each of Pultes and
Centexs fiscal year 2017 estimated earnings before
interest, taxes, depreciation and amortization, referred to as
EBITDA, terminal value EBITDA multiples of 6.0x to 7.0x, which
range was derived taking into consideration, among other things,
historical EBITDA trading multiples for Pulte, Centex and the
selected companies described above under Selected Public
Companies Analysis. The cash flows and terminal values
were then discounted to present value as of March 31, 2009
using discount rates ranging from 10.6% to
55
12.2%, which range was derived taking into account, among other
things, a weighted average cost of capital calculation based on
factors commonly considered for purposes of calculating an
estimated weighted average cost of capital, including the
trading volatility of the common stock of Pulte, Centex and the
selected companies described above under Selected Public
Companies Analysis relative to the overall market. This
indicated an implied per share equity reference range for Pulte
of approximately $19.50 to $24.25 per share and for Centex of
approximately $21.25 to $27.00 per share (without taking into
account potential synergies) and approximately $36.00 to $43.75
per share (after taking into account potential synergies). Based
on the implied per share equity reference ranges derived for
Pulte and Centex, this analysis indicated the following implied
exchange ratio reference ranges, as compared to the exchange
ratio provided for in the Merger Agreement:
|
|
|
|
|
Implied Exchange Ratio Reference Ranges
|
|
|
Without Potential Synergies
|
|
With Potential Synergies
|
|
Exchange Ratio
|
|
0.88 - 1.39
|
|
1.48 - 2.25
|
|
0.975
|
Contribution
Analysis
Citi reviewed the relative financial contributions of Pulte and
Centex to the future financial performance of the combined
company on a pro forma basis based on historical financial
results and internal estimates of Pultes management for
Pulte and Centex, without giving effect to potential synergies
anticipated by Pultes management to result from the
merger. For purposes of this analysis, Citi reviewed
Pultes and Centexs:
|
|
|
|
|
calendar year 2008 revenue, free cash flow, book value, and
deferred tax asset value adjusted book value;
|
|
|
|
calendar year 2009 estimated revenue, free cash flow and book
value;
|
|
|
|
calendar year 2010 estimated revenue, EBITDA, adjusted EBIT, and
book value; and
|
|
|
|
calendar years 2011 and 2012 estimated EBITDA and adjusted EBIT.
|
Citi then derived from the relative contributions implied by
these metrics a selected contribution percentage range for Pulte
of approximately 44.4% to 68.3% and for Centex of approximately
31.7% to 55.6%. Based on these ranges for Pulte and Centex, this
analysis indicated the following exchange ratio reference range,
as compared to the exchange ratio provided for in the Merger
Agreement:
|
|
|
|
|
Selected Exchange Ratio Reference Range
|
|
Exchange Ratio
|
|
0.68 - 2.61
|
|
|
0.975
|
|
56
Pro
Forma Financial Analysis
Citi reviewed the potential pro forma financial effects of the
merger on, among other things, the combined companys full
calendar years 2009, 2010 and 2011 estimated earnings per share,
referred to as EPS, book value per share and tangible book value
per share (calculated as book value less goodwill) based on
internal estimates of Pultes management, including the
Pulte strategic-case forecasts and the Centex strategic-case
forecasts, after taking into account potential synergies
anticipated by Pultes management to result from the
merger. Based on the exchange ratio provided for in the Merger
Agreement, this analysis indicated that the merger could be
accretive to Pultes calendar years 2009, 2010 and 2011
estimated EPS and book value per share and calendar years 2010
and 2011 estimated tangible book value per share and dilutive to
Pultes calendar year 2009 estimated tangible book value
per share as follows (percentages that could not be calculated
due to values of less than zero are designated as not
meaningful):
|
|
|
|
|
Percentage
|
|
|
Accretion/(Dilution)
|
|
EPS:
|
|
|
Calendar Year 2009
|
|
Not Meaningful
|
Calendar Year 2010
|
|
Not Meaningful
|
Calendar Year 2011
|
|
169.6%
|
Book Value Per Share:
|
|
|
Calendar Year 2009
|
|
8.5%
|
Calendar Year 2010
|
|
17.0%
|
Calendar Year 2011
|
|
24.8%
|
Tangible Book Value Per Share:
|
|
|
Calendar Year 2009
|
|
(1.4)%
|
Calendar Year 2010
|
|
6.5%
|
Calendar Year 2011
|
|
14.9%
|
The actual results achieved by the combined company may vary
from forecasted results and the variations may be material.
Miscellaneous
Under the terms of Citis engagement, Pulte has agreed to
pay Citi for its financial advisory services in connection with
the merger an aggregate fee of $12.5 million,
$2.5 million of which was payable upon delivery of
Citis opinion and $10.0 million of which is
contingent upon completion of the merger. Pulte also has agreed
to reimburse Citi for reasonable expenses incurred by Citi in
performing its services, including reasonable fees and expenses
of its legal counsel, and to indemnify Citi and related persons
against liabilities, including liabilities under the federal
securities laws, arising out of its engagement.
Citi and its affiliates in the past have provided, currently are
providing and in the future may provide services to Pulte and
Centex unrelated to the proposed merger, for which services Citi
and its affiliates have received and expect to receive
compensation, including, without limitation, (1) acting as
joint arranger
and/or agent
for, and as a lender under, revolving credit facilities of Pulte
with initial principal amounts of $1.6 billion and
$1.86 billion, respectively, and (2) acting as agent
for, and as a lender under, a revolving credit facility of
Centex with an initial principal amount of $2.085 billion.
Excluding the compensation paid and payable to Citi as described
above in connection with the merger, during the past two years,
Citi and its affiliates have received in the aggregate
approximately $1.0 million from Pulte and its affiliates as
compensation for investment banking and other financial
services. In the ordinary course of business, Citi and its
affiliates may actively trade or hold the securities of Pulte
and Centex for its own account or for the account of its
customers and, accordingly, may at any time hold a long or short
position in those securities. In addition, Citi and its
affiliates, including Citigroup Inc. and its affiliates, may
maintain relationships with Pulte, Centex and their respective
affiliates.
Pulte selected Citi as its financial advisor in connection with
the merger based on Citis reputation, experience and
familiarity with Pultes business. Citi is an
internationally recognized investment banking firm
57
which regularly engages in the valuation of businesses and their
securities in connection with mergers and acquisitions,
negotiated underwritings, competitive bids, secondary
distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other
purposes. The issuance of Citis opinion was authorized by
Citis fairness opinion committee.
Opinion
of Centexs Financial Advisor
Goldman Sachs rendered its opinion to Centexs board of
directors that, as of April 7, 2009 and based upon and
subject to the factors and assumptions set forth therein, the
exchange ratio of 0.975 shares of Pulte common stock to be
paid for each share of Centex common stock was fair from a
financial point of view to the holders of the outstanding shares
of Centex common stock.
The full text of the written opinion of Goldman Sachs, dated
April 7, 2009, which sets forth assumptions made,
procedures followed, matters considered and limitations on the
review undertaken in connection with the opinion, is attached to
this joint proxy statement/prospectus as Annex C. Goldman
Sachs provided its opinion for the information and assistance of
Centexs board of directors in connection with its
consideration of the transaction. The Goldman Sachs opinion is
not a recommendation as to how any holder of Centex common stock
should vote with respect to the transaction, or any other
matter.
In connection with rendering the opinion described above and
performing its related financial analyses, Goldman Sachs
reviewed, among other things:
|
|
|
|
|
the Merger Agreement;
|
|
|
|
annual reports to stockholders and Annual Reports on
Form 10-K
of Centex and Pulte for the five fiscal years ended
March 31, 2008 and December 31, 2008, respectively;
|
|
|
|
certain interim reports to stockholders and Quarterly Reports on
Form 10-Q
of Centex and Pulte;
|
|
|
|
certain other communications from Centex and Pulte to their
respective stockholders;
|
|
|
|
certain publicly available research analyst reports for Centex
and Pulte;
|
|
|
|
certain internal financial analyses and forecasts for Centex
prepared by its management and certain internal financial
analyses and forecasts for Pulte prepared by its management, as
adjusted by the management of Centex, in each case, as approved
for Goldman Sachss use by Centex, which we refer to as the
forecasts;
|
|
|
|
certain cost savings and operating synergies projected by the
management of Pulte to result from the transaction; and
|
|
|
|
certain cost savings and operating synergies projected by the
management of Centex to result from the transaction, as approved
for Goldman Sachss use by Centex, which we refer to as the
synergies.
|
Goldman Sachs also held discussions with members of the senior
management of Pulte regarding their assessment of the strategic
rationale for, and the potential benefits of, the transaction
and the past and current business operations, financial
condition, and future prospects of Pulte, and with members of
the senior management of Centex regarding their assessment of
the strategic rationale for, and the potential benefits of, the
transaction and the past and current business operations,
financial condition, and future prospects of Centex and Pulte.
In addition, Goldman Sachs reviewed the reported price and
trading activity for shares of Centex common stock and Pulte
common stock, compared certain financial and stock market
information for Centex and Pulte with similar information for
certain other companies the securities of which are publicly
traded, reviewed the financial terms of certain recent business
combinations in the home building industry specifically and in
other industries generally and performed such other studies and
analyses, and considered such other factors, as it considered
appropriate.
For purposes of rendering the opinion described above, Goldman
Sachs relied upon and assumed, without assuming any
responsibility for independent verification, the accuracy and
completeness of all of the financial,
58
legal, accounting, tax and other information provided to,
discussed with or reviewed by it. In that regard, Goldman Sachs
has assumed that the forecasts and the synergies have been
reasonably prepared on a basis reflecting the best then
available estimates and judgments of the management of Centex
and that the synergies will be realized in all respects
meaningful to Goldman Sachss analysis. In addition,
Goldman Sachs did not make an independent evaluation or
appraisal of the assets and liabilities (including any
contingent, derivative or off-balance-sheet assets and
liabilities) of Centex or Pulte or any of their respective
subsidiaries and it has not been furnished with any such
evaluation or appraisal. Goldman Sachs also has assumed that all
governmental, regulatory or other consents and approvals
necessary for the consummation of the transaction will be
obtained without any adverse effect on Centex or Pulte or on the
expected benefits of the transaction in any way meaningful to
its analysis.
Goldman Sachss opinion addresses only the fairness from a
financial point of view, as of the date of the opinion, of the
exchange ratio pursuant to the Merger Agreement, and Goldman
Sachss opinion to the Centex board of directors does not
otherwise address any legal, regulatory, tax or accounting
matters nor does it address the underlying business decision of
Centex to engage in the transaction or the relative merits of
the transaction as compared to any strategic alternatives that
may have been available to Centex. Goldman Sachs does not
express any view on, and Goldman Sachss opinion does not
address, any other term or aspect of the Merger Agreement or the
transaction other than the fairness from a financial point of
view, as of the date of the opinion, of the exchange ratio
pursuant to the Merger Agreement, including, without limitation,
the fairness of the transaction to, or any other consideration
received in connection therewith by, the holders of any other
class of securities, creditors or other constituencies of Centex
or Pulte; the fairness of the amount or nature of any
compensation to be paid or payable to any of the officers,
directors or employees of Centex or Pulte, or class of such
persons in connection with the transaction, whether derived from
the exchange ratio pursuant to the Merger Agreement or
otherwise. Goldman Sachs did not express any opinion as to the
prices at which shares of Pulte common stock will trade at any
time. Goldman Sachss opinion was necessarily based on
economic, monetary, market and other conditions as in effect on,
and the information made available to it as of, the date of the
opinion and Goldman Sachs assumed no responsibility for
updating, revising or reaffirming its opinion based on
circumstances, developments or events occurring after the date
of its opinion. Goldman Sachss opinion was approved by a
fairness committee of Goldman Sachs.
The following is a summary of the material financial analyses
delivered by Goldman Sachs to Centexs board of directors
in connection with rendering the opinion described above. The
following summary, however, does not purport to be a complete
description of the financial analyses performed by Goldman
Sachs, nor does the order of analyses described represent
relative importance or weight given to those analyses by Goldman
Sachs. Some of the summaries of the financial analyses include
information presented in tabular format. The tables must be read
together with the full text of each summary and are alone not a
complete description of Goldman Sachss financial analyses.
Except as otherwise noted, the following quantitative
information, to the extent that it is based on market data, is
based on market data as it existed before April 7, 2009 and
is not necessarily indicative of current market conditions.
Historical Stock Trading Analysis. Goldman
Sachs reviewed the historical trading prices for Centex common
stock as of February 27, 2009, the date on which Centex and
Pulte commenced serious discussions and April 6, 2009, the
last trading day prior to the delivery of Goldman Sachss
opinion. In addition, Goldman Sachs analyzed the consideration
to be received by holders of Centex common stock pursuant to the
Merger Agreement in relation to the market prices of Centex
common stock as of February 27, 2009 and April 6,
2009. This analysis was undertaken to assist the Centex board of
directors in understanding how the Pulte proposal compared to
recent historical market prices of Centex common stock. To
undertake this analysis, the Pulte proposal needed to be
converted into an implied price per share, and the market price
of $8.29 per share of Centex common stock on April 6, 2009
was used for this purpose.
This analysis indicated that the implied value per share to be
paid to Centex stockholders pursuant to the Merger Agreement
represented:
|
|
|
|
|
a premium of 81.7% based on the February 27, 2009 market
price of $6.21 per share of Centex common stock; and
|
59
|
|
|
|
|
a premium of 36.1% based on the April 6, 2009 market price
of $8.29 per share of Centex common stock.
|
Selected Companies Analysis. Goldman Sachs
reviewed and compared certain financial information and public
market multiples for Centex and Pulte to corresponding financial
information and public market multiples for the following
publicly traded corporations in the homebuilding industry:
|
|
|
|
|
D.R. Horton, Inc.
|
|
|
|
KB Home
|
|
|
|
Lennar Corporation
|
|
|
|
M.D.C. Holdings, Inc.
|
|
|
|
NVR, Inc.
|
|
|
|
The Ryland Group, Inc.
|
|
|
|
Toll Brothers, Inc.
|
Orleans Homebuilders and Meritage were excluded from Goldman
Sachss analysis based on the size of their market
capitalization relative to the other comparable companies. As of
April 6, 2009, the market capitalization of Orleans
Homebuilders was $44 million and the market capitalization
of Meritage was $403 million.
Although none of the selected companies is directly comparable
to Centex or Pulte, the companies included were chosen because
they are publicly traded companies in the homebuilding industry,
the industry in which Centex operates. The analysis was
undertaken to assist the Centex board of directors in
understanding how the common stock of Centex, Pulte and their
peers were trading relative to their 52-week market highs, as
compared to public estimates of such companies annual
growth rates and historical and estimated future book values, a
commonly used financial metric for the homebuilding industry,
and whether Centexs and Pultes common stock was
trading in line with other companies in the homebuilding
industry. The analysis was also undertaken in order to assist
Goldman Sachs in understanding how the various companies within
the homebuilding industry were then currently trading with
respect to certain commonly used financial metrics and in
understanding if the shares of Centex or Pulte were trading at a
relative premium or discount to one another. The analysis was
provided to the Centex board of directors to help the directors
to understand the existing market dynamics with respect to the
selected companies, including Pulte and Centex.
Goldman Sachs calculated and compared the selected
companies last twelve months, 2009 and 2010 price-book
value ratio and estimated five-year earnings per share
compounded annual growth rate, or CAGR, for calendar years ended
December 31, 2009 to 2014, to the corresponding data for
Centex and Pulte based on certain publicly available financial
information and the Institutional Brokers Estimate System,
or IBES. The 2009 price/book value ratio for each the selected
companies is as follows: D.R. Horton, Inc., 1.28x; KB Home,
0.96x; Lennar Corporation, 0.53x; M.D.C. Holdings, Inc., 1.63x;
NVR, Inc., not applicable; The Ryland Group, 1.16x; and Toll
Brothers, Inc., 1.00x. The ratios of 2009 and 2010 estimated
price to book value of shareholders equity per share were
calculated using Centexs closing share price on
April 6, 2009 and IBES median estimates for book value of
shareholders equity per share as of April 6, 2009.
The results of these analyses are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Companies
|
|
|
|
|
|
|
Range
|
|
Median
|
|
Centex
|
|
Pulte
|
|
LTM Price/Book Value
|
|
|
2.02x-0.46x
|
|
|
|
1.05
|
x
|
|
|
0.78x
|
|
|
|
1.05
|
x
|
2009 Price/Book Value
|
|
|
1.63x-0.53
|
x
|
|
|
1.14
|
x
|
|
|
1.34
|
x
|
|
|
1.12
|
x
|
2010 Price/Book Value
|
|
|
1.72x-0.53
|
x
|
|
|
1.05
|
x
|
|
|
0.72
|
x
|
|
|
1.12
|
x
|
Five-year EPS CAGR (CY2009E-2014E)
|
|
|
15%-5%
|
|
|
|
10
|
%
|
|
|
8
|
%
|
|
|
15
|
%
|
60
Goldman Sachs also analyzed certain publicly available
information relating to selected transactions involving
companies in the homebuilding industry. The following precedent
transactions were considered in Goldman Sachs analysis
(target / acquiror): William Lyon
Homes / General William Lyon; Crossman
Comm. / Beazer Homes; Forecast / Hovnanian;
Schuler Homes / DR Horton; Del Webb / Pulte
Homes; Engle Homes / Technical Olympic; US
Home / Lennar; Lewis Homes / KB Home;
Continental / DR Horton.
Analysis at Various Prices. Goldman Sachs
performed certain analyses, based on publicly available
historical information and projections provided by Centex
management. Assuming an exchange ratio of 0.975 shares of
Pulte common stock for each share of Centex common stock,
Goldman Sachs calculated for Centex the implied Centex share
price per share as of April 6, 2009, the implied total
equity consideration (on a diluted basis), implied enterprise
value, the implied book value per share multiple and the implied
earnings per share multiple. The analysis was undertaken to
assist the Centex board of directors understanding as to
how Pultes proposal, converted into an implied per share
cash value based on the market price of Pultes common
stock, compared to recent market prices of Centex common stock
and how such price could be compared as a multiple of
Centexs historical and estimated future book value. The
following table presents the results of Goldman Sachss
analysis (dollar amounts in millions, except for implied value
per share):
|
|
|
|
|
|
|
|
|
Implied price per Centex Common Stock (as of April 6, 2009)
|
|
|
|
|
|
$
|
11.28
|
|
Premium to market price (as of February 27, 2009)
|
|
|
|
|
|
|
81.7
|
%
|
Premium to market price (as of April 6, 2009)
|
|
|
|
|
|
|
36.1
|
%
|
Implied Fully-diluted Equity Value
|
|
|
|
|
|
$
|
1,403
|
|
Implied Enterprise Value
|
|
|
|
|
|
$
|
3,135
|
|
Implied Book Value per Share Multiple
|
|
|
12/31/2008
|
|
|
|
1.07x
|
|
|
|
|
FY2009E
|
|
|
|
1.43x
|
|
|
|
|
FY2010E
|
|
|
|
1.41x
|
|
Illustrative Discounted Cash Flow
Analysis. Goldman Sachs performed illustrative
discounted cash flow analyses on Centex using
(1) illustrative multiples of book value, which is referred
to as the book value methodology, (2) illustrative
perpetuity growth rates of free cash flow, which is referred to
as the perpetuity growth methodology, and (3) illustrative
multiples of net income, which is referred to as the P/E
multiple methodology, in each case using Centex
managements projections and Pulte projections provided by
Pulte management as adjusted by Centex management. This analysis
was undertaken to assist the Centex board of directors in
understanding how Pultes proposal, converted into an
implied per share cash value might compare to Centexs
projections of its stand-alone future cash flows. Goldman Sachs
calculated indications of net present value of cash flows for
Centex for the fiscal years ended March 31, 2010 through
2014 using discount rates ranging from 13.5% to 14.5%. Goldman
Sachs calculated implied values per share of Centex common stock
using illustrative terminal values in the year 2014 based on
(1) book value multiples ranging from 1.0x to 1.5x,
(2) perpetuity growth rate of free cash flow from 0% to 2%,
and (3) net income multiples ranging from 6.0x to 8.0x.
Terminal multiples were estimated based upon the average trading
multiples of Centex and Pulte over time as well as the multiples
of their peers. These illustrative terminal or end values were
then discounted to calculate implied indications of present
values using discount rates ranging from 13.5% to 14.5%. For the
purposes of calculating an illustrative terminal value for both
perpetuity growth and P/E multiple methodologies, Goldman Sachs
assumed a 35% marginal tax rate per Centex managements
guidance. The estimated tax expense in each year was provided by
Centex management and based upon company projections. The 35%
tax rate was only used in conjunction with the calculation of
the terminal value in the discounted cash flow analysis. The
ranges of implied values in this analysis were calculated based
on ranges of multiples, including a range of price to earnings
multiples
(P/E
multiples), derived by Goldman Sachs utilizing its experience
and professional judgment, taking into account current and
historical trading data and the current P/E multiples for
selected homebuilding companies. The ranges of discount rates
used by Goldman Sachs in this analysis were derived by Goldman
Sachs utilizing a weighted average cost of capital analysis,
based on the capital asset pricing model, which takes into
account certain financial metrics, including betas, for Centex
and selected homebuilding companies, the risk free rate, by
reference to the U.S. government bond,
61
and an equity risk premium, which represents the excess return
demanded by investors over a risk-free rate. The following table
presents the results of this analysis:
|
|
|
|
|
|
|
Illustrative Per Share Value Indications
|
|
Book Value Methodology
|
|
$
|
8.83 - $14.85
|
|
Perpetuity Growth Methodology
|
|
$
|
9.28 - $13.47
|
|
P/E Multiple Methodology
|
|
$
|
11.21 - $16.29
|
|
In addition, Goldman Sachs performed an illustrative pro forma
discounted cash flow analysis of the combined company following
consummation of the transaction using Centex managements
projections and Pulte managements projections as adjusted
by Centex management, assuming levels of synergies achieved as
provided by both Centex and Pulte management. Goldman
Sachss analysis assumed a perpetuity growth methodology
for terminal or end value calculation based on a range of free
cash flow growth rates from 0% to 2%. The illustrative terminal
or end values were then discounted to calculate implied
indications of net present values using discount rates ranging
from 13.5% to 14.5% for Centex stand-alone and from 11.5% to
12.5% for the combined company per Pultes cost of capital.
For the purposes of calculating an illustrative terminal or end
value, Goldman Sachs assumed a 35% marginal tax rate per Centex
managements guidance. The ranges of implied values in this
analysis were calculated based on ranges of multiples, including
a range of price to earnings multiples (P/E multiples), derived
by Goldman Sachs utilizing its experience and professional
judgment, taking into account current and historical trading
data and the current P/E multiples for selected homebuilding
companies. The ranges of discount rates used by Goldman Sachs in
this analysis were derived by Goldman Sachs utilizing a weighted
average cost of capital analysis, based on the capital asset
pricing model, which takes into account certain financial
metrics, including betas, for Centex and selected homebuilding
companies, the risk free rate, by reference to the
U.S. government bond, and an equity risk premium, which
represents the excess return demanded by investors over a
risk-free rate. The following table presents the results of this
analysis:
|
|
|
|
|
|
|
Illustrative Per Share Value Indications
|
|
Centex Stand-alone Value
|
|
$
|
9.28 - $13.47
|
|
Combined Company Value
|
|
$
|
13.19 - $17.57
|
|
Pro Forma Value to Centex Stockholders Assuming Pulte Management
Synergies
|
|
$
|
20.08 - $27.17
|
|
Pro Forma Value to Centex Stockholders Assuming Centex
Management Synergies
|
|
$
|
21.85 - $29.26
|
|
Contribution Analysis. Goldman Sachs reviewed
specific historical and estimated future operating and financial
information including, among other things, book value of
stockholders equity, market capitalization, implied fair
market value of stockholders equity based on publicly
available research of a leading homebuilder research firm and
relative discounted cash flows for Centex and Pulte. The
analysis was undertaken to assist the Centex board of directors
in understanding how the Pulte proposal, expressed as a
percentage of the combined companys total common equity,
compared to the percentage of the combined companys book
value and projected cash flows, among other measures,
contributed to the combined company by Centex or Pulte, as the
case may be. The analysis indicated that Centexs
stockholders would receive 31.9% of the outstanding common
equity of the combined company following completion of the
transaction. Goldman Sachs analyzed the relative potential cash
flow contribution of Centex and Pulte to the combined company
following completion of the transaction pursuant to the
perpetuity growth methodology and assumed a 14% discount rate
for Centex and a 12% discount rate for Pulte, and a 1.0%
perpetuity growth rate of free cash flow. Centex has a different
weighted average cost of capital than Pulte, which accounts for
the difference in discount rates.
62
|
|
|
|
|
|
|
|
|
|
|
Pro Forma Contribution
|
|
Pro Forma Contribution
|
|
|
by Centex
|
|
by Pulte
|
|
Book Value (December 31, 2008)
|
|
|
31.7
|
%
|
|
|
68.3
|
%
|
Market Capitalization (April 6, 2009)
|
|
|
25.6
|
%
|
|
|
74.4
|
%
|
Implied Fair Market Value of Stockholders Equity
|
|
|
25.7
|
%
|
|
|
74.3
|
%
|
Relative Discounted Cash Flow
|
|
|
25.2
|
%
|
|
|
74.8
|
%
|
Equity Ownership in Combined Company
|
|
|
31.9
|
%
|
|
|
68.1
|
%
|
Present Value of Future Share Price
Analysis. Goldman Sachs performed an illustrative
analysis of the implied present value of the future price per
share of Centex common stock, which is designed to provide an
indication of the present value of a theoretical future value of
a companys equity as a function of such companys
estimated future earnings and its assumed price to future book
value of stockholders equity per share multiple. For this
analysis, Goldman Sachs used Centex management projections for
fiscal years ended March 31, 2010 to 2014 and Pulte
projections provided by Pulte management as adjusted by Centex
management.
Goldman Sachs first calculated, based on an assumed book value
of stockholders equity multiple of 1.0x, the projected
future value per share of Centex common stock, and then
discounted the projected future value per share back, using a
discount rate of 16.0%, to derive the present value of the
projected future value of Centex common stock. Goldman Sachs
also performed the same calculation based on an assumed book
value multiple of 1.5x. The discount rate used in this analysis
reflects the cost of equity which is calculated by taking into
account certain financial metrics, including betas, for Centex,
the risk free rate, by reference to the
10-year
U.S. Government Treasury bond, and an equity risk premium,
which represents the excess return demanded by investors over a
risk-free rate. The following table presents the results of this
analysis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Present Value of Centexs Stand-Alone Future Stock
Price
|
|
|
FY2010E
|
|
FY2011E
|
|
FY2012E
|
|
FY2013E
|
|
FY2014E
|
|
1.5x Book
|
|
$
|
11.15
|
|
|
$
|
8.24
|
|
|
$
|
8.51
|
|
|
$
|
11.69
|
|
|
$
|
14.67
|
|
1.0x Book
|
|
$
|
7.43
|
|
|
$
|
5.49
|
|
|
$
|
5.67
|
|
|
$
|
7.79
|
|
|
$
|
9.78
|
|
In addition, Goldman Sachs also performed an illustrative
analysis of implied pro forma present value per share of common
stock of the combined company based on Centex management
projections and Pulte management projections as adjusted by
Centex management. Goldman Sachs first calculated, based on an
assumed book value multiple of 1.0x, the projected future value
per Centex share of common stock of the combined company for
each of the fiscal years ended March 31, 2009 to
March 31, 2013, and then discounted the projected future
value per share back, using a discount rate of 14.0%, to
calculate the present value of the projected future value of
common stock of the combined company. Goldman Sachs also
performed the same calculation based on an assumed book value
multiple of 1.5x. The following table presents the results of
this analysis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Present Value of Pro Forma Future Stock Price
|
|
|
FY2009E
|
|
FY2010E
|
|
FY2011E
|
|
FY2012E
|
|
FY2013E
|
|
1.5x Book
|
|
$
|
13.48
|
|
|
$
|
12.84
|
|
|
$
|
13.64
|
|
|
$
|
16.80
|
|
|
$
|
20.13
|
|
1.0x Book
|
|
$
|
8.99
|
|
|
$
|
8.56
|
|
|
$
|
9.10
|
|
|
$
|
11.20
|
|
|
$
|
13.42
|
|
The preparation of a fairness opinion is a complex process and
is not necessarily susceptible to partial analysis or summary
description. Selecting portions of the analyses or of the
summary set forth above, without considering the analyses as a
whole, could create an incomplete view of the processes
underlying Goldman Sachss opinion. In arriving at its
fairness determination, Goldman Sachs considered the results of
all of its analyses and did not attribute any particular weight
to any factor or analysis considered by it. Rather, Goldman
Sachs made its determination as to fairness on the basis of its
experience and professional judgment after considering the
results of all of its analyses. No company or transaction used
in the above analyses as a comparison is directly comparable to
Centex or Pulte, respectively, or the contemplated transaction.
63
Goldman Sachs prepared these analyses for purposes of Goldman
Sachss providing its opinion to Centexs board of
directors as to the fairness from a financial point of view of
the exchange ratio pursuant to the Merger Agreement. These
analyses do not purport to be appraisals nor do they necessarily
reflect the prices at which businesses or securities actually
may be sold. Analyses based upon forecasts of future results are
not necessarily indicative of actual future results, which may
be significantly more or less favorable than suggested by these
analyses. Because these analyses are inherently subject to
uncertainty, being based upon numerous factors or events beyond
the control of the parties or their respective advisors, none of
Centex, Goldman Sachs or any other person assumes responsibility
if future results are materially different from those forecast.
The exchange ratio was determined through arms-length
negotiations between Centex and Pulte and was approved by
Centexs board of directors. Goldman Sachs provided advice
to Centex during these negotiations. Goldman Sachs did not,
however, recommend any specific exchange ratio to Centex or the
Centex board of directors or that any specific exchange ratio
constituted the only appropriate exchange ratio for the
transaction.
As described above, Goldman Sachss opinion to
Centexs board of directors was one of many factors taken
into consideration by Centexs board of directors in making
its determination to approve the Merger Agreement. The foregoing
summary does not purport to be a complete description of the
analyses performed by Goldman Sachs in connection with the
fairness opinion and is qualified in its entirety by reference
to the written opinion of Goldman Sachs attached to this joint
proxy statement/prospectus as Annex C.
Goldman, Sachs & Co. and its affiliates are engaged in
investment banking and financial advisory services, securities
trading, investment management, principal investment, financial
planning, benefits counseling, risk management, hedging,
financing, brokerage activities and other financial and
non-financial activities and services for various persons and
entities. In the ordinary course of these activities and
services, Goldman, Sachs & Co. and its affiliates may
at any time make or hold long or short positions and
investments, as well as actively trade or effect transactions,
in the equity, debt and other securities (or related derivative
securities) and financial instruments (including bank loans and
other obligations) of Centex, Pulte and any of their respective
affiliates or any currency or commodity that may be involved in
the transaction for their own account and for the accounts of
their customers. Goldman Sachs acted as financial advisor to
Centex in connection with, and participated in certain of the
negotiations leading to, the transaction. In addition, Goldman
Sachs has provided certain investment banking and other
financial services to Centex and its affiliates from time to
time, including having acted as financial advisor to Centex in
connection with the sale of certain of its land assets in March
2008. During the two-year period prior to April 7, 2009,
the date on which Goldman Sachs rendered its fairness opinion,
Goldman Sachs has received aggregate fees from Centex for
investment banking and other financial services unrelated to the
transaction of approximately $5,000,000. Goldman Sachs also has
provided certain investment banking and other financial services
to Pulte and its affiliates from time to time. Goldman Sachs
also may provide investment banking and other financial services
to Centex, Pulte and their respective affiliates in the future.
In connection with the above-described services Goldman Sachs
has received, and may receive in the future, compensation.
The Centex board of directors selected Goldman Sachs as its
financial advisor because it is an internationally recognized
investment banking firm that has substantial experience in
transactions similar to the transaction. During the two-year
period prior to April 7, 2009, the date on which Goldman
Sachs rendered its fairness opinion, Goldman Sachs received
aggregate fees from Centex for investment banking and other
financial services unrelated to the transaction of approximately
$5,000,000 and has not been engaged by Pulte to provide
investment banking or other financial services. Pursuant to a
letter agreement dated March 10, 2009, Centex engaged
Goldman Sachs to act as its financial advisor in connection with
the contemplated transaction. Pursuant to the terms of this
engagement letter, Centex has agreed to pay Goldman Sachs a
transaction fee of approximately $18 million,
$5 million of which was payable upon execution of the
Merger Agreement and approximately $13 million of which is
contingent upon consummation of the transaction. In addition,
Centex has agreed to reimburse Goldman Sachs for its expenses,
including attorneys fees and disbursements, and to
indemnify Goldman Sachs and related persons against various
liabilities, including certain liabilities under the federal
securities laws.
64
Regulatory
Approvals
The merger was subject to review by the DOJ and the FTC under
the HSR Act. Under the HSR Act, Pulte and Centex were required
to make pre-merger notification filings and to await the
expiration or early termination of the statutory waiting period
prior to completing the merger. The notifications required under
the HSR Act to the FTC and the DOJ were filed on April 21,
2009 by Centex and on April 22, 2009 by Pulte. The
statutory waiting period under the HSR Act expired on
May 22, 2009 at 11:59 p.m., eastern time. No further
regulatory approvals are a condition to the completion of the
merger.
At any time before or after completion of the merger, either the
DOJ, the FTC or any state attorneys general could challenge or
seek to block the merger under the antitrust laws, as it deems
necessary or desirable in the public interest. In addition, in
some jurisdictions, a private party could initiate legal action
under the antitrust laws challenging or seeking to enjoin the
merger, before or after it is completed. Pulte and Centex cannot
be sure that a challenge to the merger will not be made or that,
if a challenge is made, Pulte and Centex will prevail.
Litigation
Following the announcement of the Merger Agreement on
April 8, 2009, the following actions were filed purporting
to challenge the merger:
The first case, styled Roseman, et al. v. Alexander, et al.
(Case
No. 09-04396),
was filed in the District Court of Dallas County, Texas on
April 15, 2009. This case asserts claims on behalf of a
purported class of Centex stockholders against Centex and each
of its directors, related to an alleged breach of fiduciary duty
in connection with the merger. The complaint alleges, among
other things, that the Centex directors, aided and abetted by
Centex, breached their fiduciary duties by failing to maximize
stockholder value. Among other things, the complaint seeks to
enjoin Centex and its directors from completing the merger. The
complaint also seeks damages.
The second case, styled Hanson v. Eller, et al. (Case
No. 09-04425),
was filed in the District Court of Dallas County, Texas on
April 16, 2009. This case asserts claims on behalf of a
purported class of Centex stockholders against Centex, Pulte and
each of Centexs directors, related to an alleged breach of
fiduciary duty in connection with the merger. The complaint
alleges, among other things, that the Centex directors, aided
and abetted by Centex and Pulte, breached their fiduciary duties
by taking steps to avoid competitive bidding, by failing
properly to value Centex, and by not protecting against supposed
conflicts of interest. Among other things, the complaint seeks
to enjoin the defendants from completing the merger. The
complaint also seeks a constructive trust into which the court
should direct any benefits improperly received by the defendants
as a result of their alleged wrongful conduct.
The third case, styled Praytor v. Alexander, et al. (Case
No. 09-04518),
was filed in the District Court of Dallas County, Texas on
April 17, 2009. This case asserts claims on behalf of a
purported class of Centex stockholders against each of
Centexs directors. The complaint alleges, among other
things, that the Centex directors breached their fiduciary
duties by taking steps to avoid competitive bidding, by failing
properly to value Centex, and by not protecting against supposed
conflicts of interest. Among other things, the complaint seeks
to enjoin Centexs directors from completing the merger.
On April 21, 2009, plaintiffs in the Roseman and
Hanson actions moved to consolidate those cases with the
Praytor action, and for appointment of interim class
counsel and liaison counsel. On April 23, 2009, plaintiff
in the Praytor action filed a motion to consolidate that
action with the Roseman and Hanson actions, and
requested a briefing schedule on the issue of lead and liaison
counsel.
The fourth case, styled Witmer v. Eller, et al. (Case
No. 09-04751),
was filed in the District Court of Dallas County, Texas on
April 22, 2009. This case asserts claims on behalf of a
purported class of Centex stockholders against Centex, Pulte and
each of Centexs directors, related to an alleged breach of
fiduciary duty and an alleged abuse of control. The complaint
alleges, among other things, that the Centex directors, aided
and abetted by Centex and Pulte, breached their fiduciary duties
by failing to obtain an adequate price for Centex, by acting to
deter competing bids, by engaging in self-dealing, and by
soliciting shareholder votes
65
based upon inadequate disclosures. The complaint also alleges
that the Centex directors abused their ability to control and
influence Centex. Among other things, the complaint seeks to
enjoin the defendants from completing the merger. The complaint
also seeks a constructive trust into which the court should
direct any benefits improperly received by the defendants as a
result of their alleged wrongful conduct.
The fifth case, styled Gottlieb v. Centex Corp., et al.
(Case
No. 09-05010),
was filed in the District Court of Dallas County, Texas on
April 23, 2009. This case asserts claims on behalf of a
purported class of Centex stockholders against Centex, Pulte,
each of Centexs directors and Pi Nevada Building Company,
related to an alleged breach of fiduciary duty in connection
with the merger. The complaint alleges, among other things, that
the Centex directors, aided and abetted by Centex, Pulte and Pi
Nevada Building Company, breached their fiduciary duties by
failing to obtain an adequate price for Centex, by acting to
deter competing bids, by engaging in self-dealing, and by
soliciting stockholder votes based upon inadequate disclosures.
Among other things, the complaint seeks to enjoin the defendants
from completing the merger. The complaint also seeks damages.
On June 1, 2009, the five cases pending in the District
Court of Dallas County, Texas were consolidated under the case
number
09-4396 for
all purposes, including pretrial proceedings and trial. The
consolidated case is styled In re Centex Corporation
Shareholder Class Action Litigation and will proceed in
the 160th Judicial District of the District Court of Dallas
County, Texas.
On June 22, 2009, the plaintiffs in In re Centex
Corporation Shareholder Class Action Litigation filed a
consolidated amended class action complaint. This consolidated
complaint asserts claims on behalf of a purported class of
Centex stockholders against Centex, Pulte and each of
Centexs directors, related to an alleged breach of
fiduciary duty in connection with the merger. The consolidated
complaint alleges, among other things, that the Centex
directors, aided and abetted by Centex and Pulte, breached their
fiduciary duties by failing to obtain an adequate price for
Centex shares, by conducting a flawed process culminating in the
sale of Centex, by engaging in self-dealing, and by soliciting
stockholder votes based upon inadequate disclosures. Among other
things, the consolidated complaint seeks to enjoin the
defendants from completing the merger. The consolidated
complaint also seeks a constructive trust into which the court
should direct any benefits improperly received by the defendants
as a result of their alleged wrongful conduct. No due date has
been set for an answer or responsive pleading.
On July 10, 2009, the plaintiffs in In re Centex
Corporation Shareholder Class Action Litigation filed a
motion to compel and expedite discovery. The plaintiffs allege
that they require expedited discovery in order to prepare for a
temporary injunction hearing. The plaintiffs motion to
compel and expedite discovery further states that the plaintiffs
expect to file a motion to temporarily enjoin the merger once
Centex mails the final joint proxy statement/prospectus to
Centexs stockholders. The court set a hearing on
July 24, 2009 to hear the plaintiffs motion to compel
and expedite discovery.
On July 17, 2009, the plaintiffs in In re Centex
Corporation Shareholder Class Action Litigation and the
defendants entered into a memorandum of understanding reflecting
a preliminary settlement of the case. The memorandum of
understanding sets forth the general terms of a settlement to be
embodied in a stipulation of settlement to be submitted to the
court. The settlement is subject to, among other things,
approval by the court and additional confirmatory discovery by
the plaintiffs. Pursuant to the memorandum of understanding, the
defendants agreed to provide certain additional disclosure that
is included in this joint proxy statement/prospectus.
The sixth case, styled Anbar Holdings Ltd. v. Eller, et al.
(Case
No. 09-588699),
was filed in the District Court of Clark County, Nevada on
April 24, 2009. This case asserts claims on behalf of a
purported class of Centex stockholders against Centex, Pulte and
each of Centexs directors, related to an alleged breach of
fiduciary duty in connection with the merger. The complaint
alleges, among other things, that the Centex directors, aided
and abetted by Centex and Pulte, breached their fiduciary duties
by failing to obtain an adequate price for Centex and by acting
to deter competing bids. Among other things, the complaint seeks
to enjoin the defendants from completing the merger. The
complaint also seeks damages. On June 4, 2009, Centex and
the Centex directors responded to the complaint. Both Centex and
its directors moved to stay the Nevada case pending the
resolution of the earlier-filed consolidated action in Dallas
County, Texas. In a
66
separate filing, Centexs directors moved to dismiss the
claims against them for lack of personal jurisdiction. Finally,
Centex moved to dismiss, for failure to state a claim upon which
relief can be granted, the allegations against Centex for aiding
and abetting the Centex directors alleged breach of
fiduciary duty. On June 23, 2009, Pulte filed a motion
joining in the motion to stay, and also filed a separate motion
to dismiss the complaint. The plaintiffs filed an amended class
action complaint on June 22, 2009, which largely restates
the allegations from the complaint filed on April 24, 2009,
and adds new allegations asserting, among other things, that the
Centex directors, aided and abetted by Centex and Pulte,
breached their fiduciary duties by not protecting against
alleged conflicts of interest and soliciting stockholder votes
based upon inadequate disclosures. No due date has been set for
an answer or responsive pleading to the amended complaint.
Based on the facts known to date, the defendants believe that
the claims asserted against them in these cases are without
merit, and the defendants intend to defend themselves vigorously
against the claims.
Material
United States Federal Income Tax Consequences
The following discussion is a summary of the material
U.S. federal income tax consequences of the merger to
U.S. Holders (as defined below) of Centex common stock.
This discussion is based on the Internal Revenue Code,
applicable U.S. Treasury regulations promulgated
thereunder, administrative rulings and judicial authorities,
each as in effect as of the date of this document and all of
which are subject to change at any time, possibly with
retroactive effect. In addition, this discussion does not
address any state, local or foreign tax consequences of the
merger.
This discussion addresses only Centex stockholders who are
U.S. Holders and hold Centex common stock as a capital
asset within the meaning of Section 1221 of the Internal
Revenue Code (generally, property held for investment). It does
not address all aspects of U.S. federal income taxation
that may be relevant to a particular Centex stockholder in light
of that stockholders individual circumstances or to a
Centex stockholder who is subject to special treatment under
U.S. federal income tax law, including, without limitation:
|
|
|
|
|
a bank, insurance company or other financial institution;
|
|
|
|
a tax-exempt organization;
|
|
|
|
a mutual fund;
|
|
|
|
a
non-U.S. Holder
(as defined below);
|
|
|
|
a U.S. expatriate;
|
|
|
|
an entity or arrangement treated as a partnership for
U.S. federal income tax purposes or an investor in such
partnership;
|
|
|
|
a dealer in securities;
|
|
|
|
a holder who has a functional currency other than the United
States dollar;
|
|
|
|
a holder liable for the alternative minimum tax;
|
|
|
|
a trader in securities who elects to apply a mark-to-market
method of accounting;
|
|
|
|
a holder who holds Centex common stock as part of a hedge,
straddle, constructive sale or conversion transaction; and
|
|
|
|
a holder who acquired Centex common stock pursuant to the
exercise of employee stock options or otherwise as compensation.
|
For purposes of this discussion, U.S. Holder
refers to a beneficial owner of Centex common stock that is, for
U.S. federal income tax purposes, (1) an individual
citizen or resident of the United States, (2) a
corporation, or other entity taxable as a corporation for
U.S. federal income tax purposes, created or organized in
or under the laws of the United States, any state thereof or the
District of Columbia, (3) an estate the income of which is
subject to U.S. federal income taxation regardless of its
source or (4) a trust if it (A) is subject to the
primary supervision of a court within the United States and one
or more U.S. persons have the
67
authority to control all substantial decisions of the trust or
(B) has a valid election in effect under applicable
U.S. Treasury regulations to be treated as a
U.S. person. The term
non-U.S. Holder
means a beneficial owner of Centex common stock that is neither
a U.S. Holder nor an entity or arrangement treated as a
partnership for U.S. federal income tax purposes.
If an entity or arrangement treated as a partnership for
U.S. federal income tax purposes holds Centex common stock,
the tax treatment of a partner in such entity will generally
depend upon the status of the partner and the activities of that
partnership. A partner in a partnership holding Centex common
stock should consult its tax advisor regarding the tax
consequences of the merger.
Centex stockholders should consult their tax advisors as to
the specific tax consequences to them of the merger in light of
their particular circumstances, including the applicability and
effect of U.S. federal, state, local and foreign income and
other tax laws.
The merger has been structured to qualify as a reorganization
within the meaning of Section 368(a) of the Internal
Revenue Code. It is a condition to the completion of the merger
that Pulte receive a written opinion from its counsel, Honigman
Miller Schwartz and Cohn LLP or Sidley Austin LLP, and that
Centex receive a written opinion from its counsel, Wachtell,
Lipton, Rosen & Katz, in each case dated as of the
date of completion of the merger, to the effect that the merger
will be treated as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code. These opinions
will be based on representations provided by Pulte and Centex to
be delivered at the time of closing and on customary
assumptions. If any such representation or assumption is
inaccurate, the tax consequences of the merger to holders of
Centex common stock could differ materially from those described
below.
No ruling has been or will be sought from the IRS as to the
U.S. federal income tax consequences of the merger and an
opinion of counsel is not binding on the IRS or any court.
Accordingly, there can be no assurances that the IRS will not
disagree with or challenge any of the conclusions described
herein.
In addition, in connection with the filing of the registration
statement of which this joint proxy statement/prospectus is a
part, each of Pulte and Centex has received a legal opinion from
Honigman Miller Schwartz and Cohn LLP and Wachtell, Lipton,
Rosen & Katz, respectively, to the same effect as the
opinions described above. Neither Pulte nor Centex intends to
waive the receipt of an opinion of counsel, dated as of the date
of completion of the merger, as a condition to its obligation to
complete the merger, and neither Pulte nor Centex will waive the
receipt of this opinion as a condition to its obligation to
complete the merger without the approval of Centex stockholders.
Accordingly, the material U.S. federal income tax
consequences of the merger to U.S. Holders of Centex common
stock are as follows:
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a holder of Centex common stock will not recognize gain or loss
upon receipt of Pulte common stock solely in exchange for Centex
common stock, except with respect to cash received in lieu of
fractional shares of Pulte common stock (as discussed below);
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the aggregate tax basis in the shares of Pulte common stock
received in the merger (including any fractional shares deemed
received and exchanged for cash) will be equal to the aggregate
tax basis of the Centex common stock surrendered; and
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the holding period of the shares of Pulte common stock received
in the merger will include the holding period of the shares of
Centex common stock surrendered in exchange therefor.
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If a holder acquired different blocks of Centex common stock at
different times or different prices, such holders tax
basis and holding periods in its Pulte common stock may be
determined with reference to each block of Centex common stock.
Cash in Lieu of Fractional Shares. A
holder of Centex common stock who receives cash in lieu of a
fractional share of Pulte common stock generally will be treated
as having received such fractional share in the merger and then
as having received cash in exchange for such fractional share.
Gain or loss generally will be recognized based on the
difference between the amount of cash received in lieu of the
fractional share and
68
the tax basis allocated to such fractional share of Pulte common
stock. Such gain or loss generally will be long-term capital
gain or loss if, as of the effective date of the merger, the
holding period in the Centex common stock exchanged is greater
than one year.
Information Reporting and Backup
Withholding. A Centex stockholder may be
subject to information reporting and backup withholding on any
cash payment received in lieu of a fractional share of Pulte
common stock, unless such stockholder properly establishes an
exemption or provides a correct taxpayer identification number,
and otherwise complies with backup withholding rules. Any
amounts withheld under the backup withholding rules are not an
additional tax and may be allowed as a refund or credit against
such holders United States federal income tax liability,
provided the required information is timely furnished to the IRS.
Accounting
Treatment
Statement of Financial Accounting Standards No. 141(R),
Business Combinations, which we refer to as
SFAS 141(R), requires the use of the acquisition method of
accounting for business combinations. In applying the
acquisition method, it is necessary to identify the acquirer and
the acquiree for accounting purposes. In a business combination
effected through an exchange of equity interests, the entity
that issues the equity interests is generally considered the
acquirer, but there are other factors in SFAS 141(R) that
must also be considered. Pulte management considered these other
factors and determined that Pulte will be considered the
acquirer of Centex for accounting purposes. The total purchase
price will be allocated to the identifiable assets acquired and
liabilities assumed from Centex based on their fair values as of
the date of the completion of the transaction, with any excess
allocated to goodwill. Reports of financial condition and
results of operations of Pulte issued after completion of the
merger will reflect Centexs balances and results after
completion of the merger, but will not be restated retroactively
to reflect the historical financial position or results of
operations of Centex. Following the completion of the merger,
the earnings of the combined company will reflect acquisition
accounting adjustments; for example, additional depreciation of
property, plant and equipment, amortization of identified
intangible assets or other impacts from the purchase price
allocation.
In accordance with the Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets,
goodwill resulting from the purchase business combination
will not be amortized but instead will be tested for impairment
at least annually (more frequently if certain indicators are
present). If Pulte management determines that the value of
goodwill has become impaired, the combined company will incur an
accounting charge for the amount of impairment during the fiscal
quarter in which the determination is made.
Listing
of Pulte Common Stock
It is a condition to the completion of the merger that the
shares of Pulte common stock to be issued in connection with the
merger be approved for listing on the NYSE, subject to official
notice of issuance.
Dissenters
Rights
Pulte
Under Michigan law, holders of Pulte common stock are not
entitled to dissenters rights with respect to their Pulte
shares in connection with the proposal to approve the issuance
of shares in the merger, the proposal to approve the charter
amendment to increase the number of authorized shares of common
stock or the proposal to approve the charter amendment to change
Pultes corporate name.
Centex
Under Nevada law, holders of Centex common stock are not
entitled to dissenters rights in connection with the
merger.
Delisting
and Deregistration of Centex Common Stock
If the merger is completed, Centex common stock will be delisted
from the NYSE and deregistered under the Exchange Act and Centex
will no longer file periodic reports with the SEC.
69
Restrictions
on Sales of Shares of Pulte Common Stock Received in the
Merger
The shares of Pulte common stock to be issued in connection with
the merger will be registered under the Securities Act and will
be freely transferable, except for certain transfers to persons
who own, or would own as a result of such transfer, 4.9% or more
of Pultes outstanding securities, as described under
Description of Pulte Capital Stock Transfer
Restrictions beginning on page 122, and except for
shares issued to any Centex stockholder who may be deemed to be
an affiliate of Pulte for purposes of Rule 144
under the Securities Act. Persons who may be deemed to be
affiliates of Pulte include individuals or entities that
control, are controlled by, or are under common control with,
Pulte and may include the executive officers, directors and
significant shareholders of Pulte.
Management
and Board of Directors of Pulte After the Merger
Upon completion of the merger, Mr. Dugas, currently
president and chief executive officer of Pulte, will also assume
the position of chairman of Pulte. The other members of
Pultes senior management team following completion of the
merger will include Steven C. Petruska as executive vice
president and chief operating officer, Roger A. Cregg as
executive vice president and chief financial officer, James R.
Ellinghausen as executive vice president, human resources, Debra
W. Still as president and chief executive officer of Pulte
Mortgage LLC and Steven M. Cook as senior vice president,
general counsel and secretary, each of whom currently holds such
position with Pulte. Mr. Eller will join the Pulte board of
directors as vice chairman and will serve as a consultant to the
company for two years following the completion of the merger. In
connection with the completion of the merger, the Pulte board of
directors will be expanded to twelve directors and will include
four members of the current Centex board of directors, namely
Mr. Eller, Clint W. Murchison, III, James J. Postl and
Thomas M. Schoewe, and eight members of the current Pulte board
of directors, namely Pultes founder and current chairman
William J. Pulte, Mr. Dugas, Brian P. Anderson, Cheryl W.
Grisé, Debra J. Kelly-Ennis, David N. McCammon,
Patrick J. OLeary and Bernard W. Reznicek. Pulte has
agreed to appoint each of the Centex designees to serve on the
Pulte board of directors until Pultes next annual meeting
of shareholders and to nominate each of the Centex designees at
its next annual meeting of shareholders, such that one will be
nominated to a term expiring at the second annual meeting
following the date of completion of the merger, one will be
nominated to a term expiring at the third annual meeting
following the date of completion of the merger and two will be
nominated to terms expiring at the fourth annual meeting
following the date of completion of the merger. In accordance
with Pultes Restated Articles of Incorporation, each of
the Centex designees appointed to serve on the Pulte board of
directors until Pultes next annual meeting of shareholders
will serve without classification until such annual meeting of
shareholders takes place. The Pulte board of directors has not
yet determined the class of the Pulte board of directors to
which each of the Centex designees will be nominated at the next
Pulte annual meeting of shareholders.
Interests
of Pultes Directors and Executive Officers in the
Merger
Pulte believes that none of the executive officers and directors
of Pulte has interests in the merger that differ from, or are in
addition to, the interests of Pultes shareholders.
Interests
of Centexs Directors and Executive Officers in the
Merger
In considering the recommendation of Centexs board of
directors that Centex stockholders vote for the proposal to
approve the Merger Agreement, Centex stockholders should be
aware that some of Centexs executive officers and
directors have financial interests in the merger that are
different from, or in addition to, those of Centexs
stockholders generally. For purposes of all of the Centex
agreements and plans described below, the completion of the
transactions contemplated by the Merger Agreement will
constitute a change in control.
Equity
Compensation Awards
The Centex equity compensation plans generally provide that
outstanding options, restricted shares, restricted stock units
and deferred stock units vest in full upon a change in control
of Centex, such as the
70
merger. However, the Merger Agreement provides that restricted
stock granted as long-term incentive awards under the Centex
equity compensation plans after execution of the Merger
Agreement and before the completion of the merger will not vest
upon completion of the merger. Instead, the Merger Agreement
provides that upon completion of the merger, subject to
continued employment (1) 25% of the number of shares of
restricted stock that were subject to those awards on the date
of grant will be forfeited, (2) 25% will vest on
March 31, 2010, (3) 25% will vest on March 31,
2011 and (4) 25% will vest on March 31, 2012. In May
2009, with Pultes consent, Centex awarded 278,482
restricted stock units and 835,505 shares of restricted
stock to executive officers and other employees pursuant to
Centexs annual long-term award practices. Consistent with
the intent of the Merger Agreement, all of the 2009 restricted
stock units (representing 25% of the aggregate 2009 long-term
award to each participant) will be forfeited upon completion of
the merger, and
331/3%
of each participants 2009 restricted stock award
(representing 25% of the aggregate 2009 long-term award to each
participant) will vest on each of March 31, 2010, 2011 and
2012. If, following completion of the merger, the holder of such
a restricted stock award is terminated from employment in a
severance-qualifying termination, the next installment of the
award will immediately vest. Consistent with Centexs
outside director compensation plan, and with Pultes
consent, Centex currently anticipates that it will award to each
of its non-employee directors in July 2009 restricted stock
units having a grant date value of $100,000 that will vest
immediately but not be settled until the third anniversary of
grant, with no provision for accelerated settlement upon the
change in control resulting from the merger.
In addition, the Merger Agreement provides that, with respect to
stock options issued to employees under the Centex equity
compensation plans with an exercise price of less than $40.00
per share, if the employment of the holder of the option is
terminated during the two-year period following the merger under
circumstances that would entitle the holder to severance
benefits under a severance plan or agreement to which the holder
is a party, the stock option will remain exercisable until the
later of (1) the third anniversary of the date of the
termination of employment and (2) the date on which the
option would cease to be exercisable in accordance with its
terms (or, in either case, if earlier, the expiration of the
scheduled term of the option).
Long
Term Performance Units
Each of Centexs executive officers holds unvested
long-term performance units issued under Centexs 2003
Equity Incentive Plan. Long-term performance units represent the
right to receive cash amounts based upon the achievement of
certain performance goals and the value of Centex common stock.
The Merger Agreement provides that each unvested unit
outstanding prior to the merger will be converted into the right
to receive an amount of cash equal to the product of
(1) the total number of shares of Centex common stock
subject to the unit, assuming the achievement of all performance
goals applicable to the performance unit at target levels, and
(2) the fair market value (as defined in the 2003 Equity
Incentive Plan) of a share of Centex common stock on the day
immediately prior to the date on which the merger occurs.
Equity
Compensation Vesting Table
The table below sets forth on an individual basis the number of
stock options, deferred stock units, restricted stock units,
restricted stock, and long-term performance units that will vest
upon consummation of the merger for each Centex named executive
officer, as well as for the remaining executive officers and
directors as a group. The table also includes the aggregate
value of all such awards, based on the closing price of Pulte
common stock (or Centex common stock, as applicable) as of
July 13, 2009, and valuing all stock options based on the
excess, if any, of fair market value of the underlying shares
over the exercise price. The table (including the aggregate
value amounts) also includes the following unvested restricted
stock awards held by Centex executive officers that would vest
upon a termination of service without cause
immediately after the completion of the merger: Ms. Smith
23,986, Mr. Stewart 13,325, Mr. Woram 14,658, and all
other executive officers as a group 30,648. The table does not
include the portion of the awards granted subsequent to the
execution of the Merger Agreement which would be forfeited upon
a termination of service without cause immediately
after completion of the merger. The table is based on Centex
equity compensation awards outstanding as of the Pulte record
date, and assumes that the merger is completed on
August 18, 2009. See
71
Equity Compensation Awards beginning on
page 70 for a description of the terms of awards granted
subsequent to execution of the Merger Agreement.
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Value of All
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Range of Exercise
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Restricted Stock
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Long-Term
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Accelerated
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Stock Options
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Prices
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Deferred Stock Units
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Units
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Restricted Shares
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Performance Units
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Equity Awards
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Timothy R. Eller
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228,768
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$
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22.08-$45.53
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0
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0
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341,763
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130,163
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$
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3,730,277
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Catherine R. Smith
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113,493
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$
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22.08-$52.48
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0
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0
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135,988
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53,055
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$
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1,494,159
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David L. Barclay
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0
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0
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0
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0
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0
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$
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0
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Robert S. Stewart
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31,104
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$
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22.08-$45.53
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0
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0
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44,326
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22,636
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$
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528,807
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Brian J. Woram
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40,335
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$
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22.08-$45.53
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0
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0
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61,160
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30,134
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$
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721,044
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All other executive officers and directors as a group
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88,468
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$
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22.08-$50.90
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3,478
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12,056
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216,114
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59,985
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$
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2,307,557
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Annual
Incentive Plan
Centex maintains the 2003 Annual Incentive Compensation Plan,
which provides senior executives with the opportunity to earn
incentive-based compensation based on the achievement of certain
performance goals. Certain of Centexs executive officers
have been selected as participants in the plan for fiscal year
2010.
The plan provides for the payment of the target award to each
participant for the fiscal year in which a change in control,
such as the merger, occurs, upon such change in control.
Assuming that the merger is completed on August 18, 2009,
each of Timothy R. Eller, Catherine R. Smith, Robert S. Stewart
and Brian J. Woram, and all other executive officers entitled to
payments under this plan will receive $2,750,800, $572,000,
$312,000, $450,000 and $328,000, respectively, in respect of the
payment of the target award pursuant to the annual bonus plan in
connection with the merger.
Plan
Regarding Severance After a Change in Control
On April 7, 2009, the Centex board of directors approved
the Centex Corporation Plan Regarding Severance After a Change
in Control, which we refer to as the CIC Severance Plan, which
will supersede the Centex Corporation Executive Severance Policy
upon a change in control of Centex, such as the merger. The
executive severance policy will continue to govern benefits for
participants whose employment is terminated prior to a change in
control or who are not participants in the CIC Severance Plan.
Each of Centexs executive officers is a participant in the
CIC Severance Plan. Under this plan, in the event that, during
the two year period following a change in control, a
participants employment is terminated by Centex without
cause, or by the participant for good
reason (in each case as defined in the plan), the
participant will generally be entitled to receive a lump sum
cash payment equal to two times (in the case of Mr. Eller)
or 1.5 times (in the case of Ms. Smith and
Messrs. Stewart and Woram) the executives base salary
and annual target bonus, as well as customary outplacement
services.
If a participant receives a bonus payment under the change in
control provision of the annual bonus plan described above and
is subsequently terminated during the same fiscal year in which
the change in control occurs, the cash severance payable under
the CIC Severance Plan will be reduced by an amount equal to the
portion of the bonus payment attributable to the portion of the
year with respect to which the participant did not perform
services. In addition, the cash severance payable under the CIC
Severance Plan may not exceed 2.99 times the sum of the
participants base salary, annual bonus, and the value of
other incentive compensation granted to the participant in the
CIC Severance Plan during the year immediately prior to the year
in which the change in control occurs. If a participant in the
CIC Severance Plan would be subject to the golden
parachute excise tax under Section 4999 of the
Internal Revenue Code, amounts payable to participants under the
plan will be reduced to the maximum amount that the participant
could receive without being subject to the tax if such a
reduction would place the executive in a better after-tax
position than no such reduction. This provision would not apply
to any participant who is party to a change in control
72
agreement. As noted below, each of Centexs executive
officers (other than Scott J. Richter) is subject to such an
agreement.
Based on compensation and benefit levels in effect on
July 13, 2009 and assuming the merger is completed on
August 18, 2009 and the employment of each executive
officer is terminated by Centex without cause or by
the executive for good reason immediately
thereafter, each of Timothy R. Eller, Catherine R. Smith, Robert
S. Stewart and Brian J. Woram, and each of the remaining
executive officers as a group, will be entitled to receive
$5,645,901, $1,363,397, $860,671, $1,072,603 and $2,759,166,
respectively, in cash severance payments under the CIC Severance
Plan.
Change
in Control Agreements
Each of Centexs executive officers (other than
Mr. Richter) is party to an agreement with Centex which
provides that, in the event that the executive would be subject
to the excise tax under Section 4999 of the Internal
Revenue Code, the executive would receive an additional payment
such that the executive would be placed in the same after-tax
position as if no excise tax had been imposed, unless the
underlying payments to which the executive is entitled are less
than 110% of the maximum amount of payments that would not be
subject to the excise tax, in which case the payments will be
reduced to the maximum amount of payments that would not be
subject to the excise tax.
Consulting
Agreement Between Timothy R. Eller and Pulte
On April 7, 2009, Timothy R. Eller, chairman and chief
executive officer of Centex, entered into a consulting agreement
with Pulte, which will become effective upon the completion of
the merger. The consulting agreement provides that, upon the
completion of the merger, Mr. Eller (1) will resign
his positions with Centex and become vice chairman of
Pultes board of directors and a consultant to Pulte,
reporting to Pultes chief executive officer, with the
consulting period and board service to continue for
24 months following the occurrence of the merger and
(2) will be entitled to all payments and benefits under the
CIC Severance Plan resulting from a termination for good
reason, plus an additional payment of $293,000, and all of
his Centex equity awards will vest in full, with his stock
options becoming exercisable for their full term. See The
Merger Interests of Centexs Directors and
Executive Officers in the Merger Plan regarding
Severance After a Change in Control beginning on
page 72 for a description of the payments and benefits to
which Mr. Eller will be entitled under the CIC Severance
Plan.
The consulting agreement also provides that Pulte (1) will
pay to Mr. Eller board fees equal to the fees paid to other
non-chairman directors of Pulte, an annual consulting fee of
$750,000 and an annual guaranteed performance bonus of $300,000,
(2) will grant to Mr. Eller on the date on which the
merger occurs options to purchase 650,000 shares of Pulte
common stock having a
10-year term
and an exercise price per share equal to the fair market value
of a share of Pulte common stock on such date and becoming
exercisable in two equal installments on the first and second
anniversaries of such date and (3) will provide
Mr. Eller during the consulting period with an office and
an administrative assistant in Pultes Dallas office. Upon
a termination of the consulting period for any reason, except by
Pulte for cause or by Mr. Eller without
good reason (as defined in the consulting
agreement), Mr. Eller would be entitled to the consulting
fees and guaranteed performance bonuses that would have been
payable over the remainder of the consulting period, and equity
awards in respect of board fees not yet paid. In addition, his
equity awards would vest in full, with his stock options
remaining exercisable for their full term. During the period
that Mr. Eller renders services under the consulting
agreement, Mr. Eller will be subject to a standard
non-competition and non-solicitation covenant provided by senior
executive officers of Pulte.
Nonqualified
Deferred Compensation Plans
Each of Centexs executive officers participates in the
Centex Corporation Executive Deferred Compensation Plan. In
general, the plan provides that, upon a change in control (such
as the merger), each participant will receive full vesting of
any deferred compensation cash award granted to the participant
under the plan and lump sum cash settlement of the
participants account balance under the plan.
73
Based on compensation and benefit levels in effect on
July 13, 2009, and assuming the merger is completed on
August 18, 2009, each of Timothy R. Eller, Catherine R.
Smith, David L. Barclay, Robert S. Stewart and Brian J. Woram,
and each of the remaining executive officers as a group, will
receive $0, $915,200, $0, $0, $720,000 and $297,941,
respectively, in respect of additional vesting of deferred
compensation cash awards.
Indemnification
of Directors and Officers; Directors and Officers
Insurance
The Centex directors and officers are entitled under the Merger
Agreement to continued indemnification and insurance coverage
(see The Merger Agreement Other Covenants and
Agreements beginning on page 87.
74
THE
MERGER AGREEMENT
The following summary describes the material provisions of
the Merger Agreement. The summary is qualified in its entirety
by reference to the Merger Agreement, a copy of which is
attached as Annex A to this joint proxy
statement/prospectus and is incorporated into this joint proxy
statement/prospectus by reference. You should read the Merger
Agreement carefully in its entirety, as it is the legal document
governing the transaction.
The Merger Agreement and the following summary have been
included to provide you with information regarding the terms of
the Merger Agreement and the transaction described in this joint
proxy
statement/prospectus.
We do not intend for the representations and warranties
contained in the Merger Agreement to be a source of business or
operational information about Pulte or Centex as they are made
as of a specified date, are tools used to allocate risk between
the parties, are subject to contractual standards of knowledge
and materiality and are modified or qualified by information
contained in the parties public filings and in the
disclosure schedules exchanged by the parties. Business and
operational information regarding Pulte or Centex can be found
elsewhere in this joint proxy statement/prospectus and in the
other public documents that Pulte and Centex file with the SEC.
See Additional Information Where You Can Find
More Information beginning on page 134.
Structure
and Completion of the Merger
Pursuant to the Merger Agreement, Pi Nevada Building Company, a
wholly owned subsidiary of Pulte, will merge with and into
Centex, with Centex surviving the merger as a wholly owned
subsidiary of Pulte.
The merger will occur as soon as possible but no later than the
second business day after the date upon which all of the
conditions to completion of the merger contained in the Merger
Agreement (other than those conditions that are waived or by
their nature are to be satisfied at the closing of the merger)
are satisfied or at such other date as Pulte and Centex may
agree (see Conditions to Completion of the
Merger beginning on page 78). The merger will become
effective at the time that Centex and Pi Nevada Building Company
file the articles of merger with the Secretary of State of the
State of Nevada, or at such later time agreed to by the parties
and specified in the articles of merger.
We currently expect that the merger will be completed during the
third quarter of 2009.
Merger
Consideration
Centex
Common Stock
Each share of Centex common stock issued and outstanding
immediately prior to completion of the merger (including the
preferred share purchase rights granted under Centexs
stockholder rights agreement), other than shares of Centex
common stock held by Pulte, Pi Nevada Building Company or by
Centex in its treasury, will be converted automatically into a
right to receive 0.975 shares of Pulte common stock, which
we refer to as the exchange ratio. The exchange ratio is fixed,
which means that it is not subject to adjustment. We refer to
the consideration to be paid to the Centex stockholders by Pulte
as the merger consideration. Shares of Centex common stock held
by Pulte or Pi Nevada Building Company or held by Centex in its
treasury immediately prior to the completion of the merger will
be cancelled and retired, and will not be converted into the
right to receive the merger consideration.
Stock
Options and Other Equity Awards
The Merger Agreement provides that:
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upon the completion of the merger, each Centex stock option
granted under a Centex stock plan, whether vested or unvested,
that is outstanding immediately prior to the completion of the
merger will be converted into a vested option to purchase Pulte
common stock on the same terms and conditions as were applicable
to such Centex stock option immediately prior to the completion
of the merger (except for vesting conditions), with adjustments
to the number of shares subject to the stock option and the
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exercise price per share to reflect the exchange ratio. In
addition, each stock option resulting from the conversion of a
Centex stock option that was granted with an exercise price of
less than $40.00 per share will provide that, if the option
holder experiences a severance-qualifying termination during the
two-year period following the merger, the stock option will
remain exercisable until the later of (1) the third
anniversary of the date of the termination of employment and
(2) the date on which the option would cease to be
exercisable in accordance with its terms (or, in either case, if
earlier, the expiration of the scheduled term of the option);
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upon the completion of the merger, each award of restricted
shares of, or restricted or deferred stock units with respect
to, Centex common stock granted under a Centex stock plan that
is outstanding immediately prior to the completion of the merger
will vest and be converted into a number of shares of, or units
with respect to, Pulte common stock on the same terms and
conditions (except for vesting conditions) as were applicable to
such award immediately prior to the completion of the merger,
with adjustments to the number of shares of, or units with
respect to, Pulte common stock to reflect the exchange ratio,
except that restricted stock and restricted stock units granted
to executive officers and employees as long-term incentive
awards under the Centex equity compensation plans after
execution of the Merger Agreement and before the completion of
the merger will not vest upon completion of the merger and will
be treated as described in Interests of Centexs
Directors and Executive Officers in the Merger
Equity Compensation Awards beginning on page 70.
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immediately prior to the completion of the merger, each award of
performance units granted under a Centex stock plan that is then
outstanding will vest and be converted into the right to receive
an amount in cash equal to the product of (1) the fair
market value of a share of Centex common stock on the day
immediately prior to the completion of the merger and
(2) the number of shares of Centex common stock subject to
such award (assuming the achievement of all applicable
performance goals at target levels).
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Fractional
Shares
Pulte will not issue fractional shares in the merger. Instead,
each holder of shares of Centex common stock who would otherwise
be entitled to a fractional share of Pulte common stock will be
entitled to receive a cash payment, without interest, from the
exchange agent in lieu of such fractional shares in an amount
equal to the product of:
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the fractional share interest to which such holder (after taking
into account all fractional share interests then held by such
holder) would otherwise be entitled, multiplied by,
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the per share value of one share of Pulte common stock
calculated as the average of the closing sale prices of Pulte
common stock over the five trading days immediately preceding
the date on which the completion of the merger occurs.
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The cash payable in lieu of fractional shares is the only merger
consideration payable in cash by Pulte in connection with the
proposed merger.
Exchange
of Centex Stock Certificates for Pulte Stock
Certificates
Pulte has retained Computershare Trust Company, N.A., or
Computershare, as the exchange agent for the merger to handle
the exchange of shares of Centex common stock for the merger
consideration, including the payment of cash for fractional
shares.
Only those holders of Centex common stock who properly surrender
their Centex stock certificates in accordance with the exchange
agents instructions will receive:
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a statement indicating book-entry ownership of Pulte common
stock or, if requested, a certificate representing Pulte common
stock;
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cash in lieu of any fractional share of Pulte common
stock; and
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dividends or other distributions, if any, on Pulte common stock
to which they are entitled under the terms of the Merger
Agreement.
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After the completion of the merger, each certificate
representing shares of Centex common stock that has not been
surrendered will represent only the right to receive upon
surrender of that certificate each of the items listed in the
preceding sentence. Following the completion of the merger,
Centex will not register any transfers of Centex common stock
outstanding on its stock transfer books prior to the merger.
As soon as reasonably practicable after the completion of the
merger, and in any event not later than the third business day
following the completion of the merger, the exchange agent will
mail to each holder of shares of Centex common stock a letter of
transmittal (which will specify that the delivery will be
effected, and risk of loss and title will pass, only upon proper
delivery of such holders certificates representing shares
of Centex common stock) and instructions for surrendering the
certificates representing shares of Centex common stock or
book-entry shares in exchange for the merger consideration. Upon
surrender of certificates representing shares of Centex common
stock or book-entry shares, together with an executed letter of
transmittal, to the exchange agent, the holder of those
certificates or book-entry shares will be entitled to receive
the merger consideration. The surrendered certificates
representing Centex common stock and the book-entry shares will
be cancelled. If any Centex stockholders certificates have
been lost, stolen or destroyed, Pulte may require the
stockholder to provide a customary affidavit of loss in lieu of
the actual certificates, and to deliver a bond in a reasonable
amount as indemnity against any claim that may be made against
Computershare or Pulte with respect to the certificates.
Distributions
with Respect to Unexchanged Shares
Holders of Centex common stock are not entitled to receive any
dividends or other distributions on Pulte common stock until the
merger is completed. After the merger is completed, holders of
Centex common stock certificates will be entitled to
(1) all dividends and other distributions payable in
respect of such shares of Pulte common stock with a record date
after the completion of the merger and a payment date on or
prior to the date of such surrender and not previously paid and
(2) at the appropriate payment date, an amount equal to the
dividends or other distributions payable with respect to such
shares of Pulte common stock with a record date after the
completion of the merger but with a payment date subsequent to
such surrender.
Termination
of Exchange Fund
Twelve months after the completion of the merger, Pulte may
require the exchange agent to deliver to Pulte all shares of
Pulte common stock and any cash remaining in the exchange fund.
Thereafter, Centex stockholders must look only to Pulte for
payment of the merger consideration on their shares of Centex
common stock, subject to applicable law. Any shares of Pulte
common stock or cash remaining unclaimed by holders of shares of
Centex common stock five years following the completion of the
merger (or immediately prior to such time as such amounts would
otherwise escheat to or become property of any governmental
authority) will, to the extent permitted by applicable law,
become the property of Pulte free and clear of any claims or
interest of any person previously entitled to such shares of
Pulte common stock or cash.
No
Liability
None of Pulte, Centex or Pi Nevada Building Company will be
liable to any holder of a certificate representing shares of
Centex common stock for any merger consideration delivered to a
public official pursuant to any abandoned property laws.
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Conditions
to Completion of the Merger
The obligations of Pulte, Pi Nevada Building Company and Centex
to effect the merger are subject to the fulfillment, or waiver
by Pulte, Pi Nevada Building Company and Centex, of the
following conditions at or prior to the completion of the merger:
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the approval of the Merger Agreement by the holders of a
majority of the outstanding shares of Centex common stock;
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the approval of (1) the proposal to approve the charter
amendment to increase the number of authorized shares of common
stock by the holders of a majority of the outstanding shares of
Pulte common stock and (2) the proposal to approve the
issuance of shares in the merger by a majority of the votes cast
on the proposal, provided that the total votes cast on this
proposal represent over 50% of the outstanding shares of Pulte
common stock entitled to vote on this proposal;
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the absence of any temporary restraining order or preliminary or
permanent injunction issued by any court of competent
jurisdiction that prohibits or prevents the completion of the
merger, except that no party may assert this condition to avoid
its obligation to effect the merger unless it has used its
reasonable best efforts to prevent the order or injunction, and
to appeal the order or injunction promptly;
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the expiration or termination of any applicable waiting period
under the HSR Act, which condition was satisfied upon expiration
of the applicable waiting period on May 22, 2009;
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the approval for listing on the NYSE of the shares of Pulte
common stock to be issued in the merger and to be reserved for
issuance in connection with the merger;
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the effectiveness under the Securities Act of the registration
statement on
Form S-4
of which this joint proxy statement/prospectus forms a part and
the absence of any stop order or proceedings initiated by the
SEC for that purpose;
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(1) the accuracy and correctness, in all respects as so
qualified at and as of the date of the Merger Agreement and at
and as of the date of completion of the merger as though made at
and as of the date of completion of the merger (except with
respect to the foregoing to the extent that any representation
and warranty is made as of a particular date or period), of the
representations and warranties of the other party, subject to
certain exceptions, which are qualified by a Material
Adverse Effect qualification, (2) the accuracy and
correctness, at and as of the date of the Merger Agreement and
at and as of the date of completion of the merger as though made
at and as of the date of completion of the merger (except with
respect to the foregoing to the extent that any representation
and warranty is made as of a particular date or period), except
for such failures to be true and correct as are not having or
would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on such party, of the
representations and warranties of the other party, subject to
exceptions, which are not qualified by a Material Adverse
Effect qualification, (3) the accuracy and
correctness, except for de minimis inaccuracies, on the
date of the Merger Agreement and on the date of completion of
the merger as if made on and as of such dates (except with
respect to the foregoing to the extent that any representation
and warranty is made as of a particular date or period), of
certain of the representations and warranties relating to the
capital structure of such party, (4) the accuracy and
correctness on the date of the Merger Agreement of the
representation relating to absence of certain changes between
December 31, 2008 and the date of the Merger Agreement, and
(5) the accuracy and correctness, in all respects on the
date of completion of the merger as if made on and as of such
date (except to the extent that any representation and warranty
is made as of a particular date or period) of the representation
relating to absence of certain changes after the date of the
Merger Agreement, and the receipt of a certificate from the
officers of the other party to that effect;
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the other partys having performed and complied with its
covenants in the Merger Agreement in all material respects prior
to the completion of the merger, and the receipt of a
certificate from the officers of the other party to that
effect; and
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the receipt by each party of an opinion from its counsel that
the merger will be treated as a reorganization
within the meaning of Section 368(a) of the Internal
Revenue Code.
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Pulte, Centex and Pi Nevada Building Company may elect to waive
certain of the foregoing conditions in accordance with the terms
of the merger agreement and applicable law. However, despite
their ability to do so, none of Pulte, Centex or Pi Nevada
Building Company currently expects to do so. The conditions to
completion of the merger relating to the approval of the Merger
Agreement by Centex stockholders, the approval of the proposal
to approve the charter amendment to increase the number of
authorized shares of common stock by Pultes shareholders,
the prohibition or prevention of the merger by a governmental
authority and the effectiveness under the Securities Act of the
registration statement on
Form S-4
may not be waived by any party to the Merger Agreement. If any
condition to completion of the merger is waived, Pulte and
Centex will evaluate the materiality of such waiver to determine
whether amendment of this joint proxy statement/prospectus and
resolicitation of proxies is necessary under applicable law or
the rules of the NYSE. If Pulte and Centex determine any such
waiver is not significant enough to require resolicitation of
proxies, they will have the discretion to complete the merger
without seeking further shareholder or stockholder approval.
Neither Pulte nor Centex will waive the receipt of the opinion
from its respective counsel that the merger will be treated as a
reorganization within the meaning of
Section 368(a) of the Internal Revenue Code as a condition
to its obligation to complete the merger without the approval of
Centex stockholders.
Neither the approval by Pulte shareholders of the proposal to
approve the charter amendment to change Pultes corporate
name nor the approval by Pulte shareholders of the Pulte meeting
adjournment proposal is a condition to completion of the merger.
Definition
of Material Adverse Effect
Material Adverse Effect, when used in the Merger
Agreement in reference to Pulte or Centex, means any such event,
change, development, state of facts, condition, circumstance or
occurrence that is materially adverse to the business, financial
condition or continuing results of operations of such party and
its subsidiaries, taken as a whole. However, none of the
following events, changes, developments, facts, conditions,
circumstances or occurrences will be deemed to have a Material
Adverse Effect if they:
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affect economic conditions generally (including changes in
interest rates) or the financial, mortgage or securities markets
in the United States or elsewhere in the world;
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affect the industries in which such party or its subsidiaries
operate generally or in any specific jurisdiction or
geographical area;
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result from or arise out of the announcement or the existence
of, or compliance with, or taking any action required or
permitted by the Merger Agreement or the transactions
contemplated by the Merger Agreement;
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result from or arise out of the taking of any action at the
written request of the other party;
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result from or arise out of any litigation arising from
allegations of a breach of fiduciary duty or other violation of
applicable law relating to the Merger Agreement or the
transactions contemplated by the Merger Agreement;
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result from or arise out of changes in applicable law, GAAP or
accounting standards;
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result from or arise out of any weather-related or other force
majeure event or outbreak or escalation of hostilities or acts
of war or terrorism, except to the extent that such party and
its subsidiaries are adversely affected in a disproportionate
manner relative to other participants in the industries in which
such party and its subsidiaries operate; or
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result from or arise out of any changes in the share price or
trading volume of such partys common stock, such
partys credit rating or in any analysts
recommendations, or the failure of such party to meet
projections or forecasts (including any analysts
projections) (although the events, changes, effects,
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developments, conditions or occurrences underlying such change
are not excluded to the extent they would otherwise constitute a
Material Adverse Effect).
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Non-Solicitation
of Alternative Transactions
The Merger Agreement provides that, except as described further
below, Centex and its subsidiaries may not and may not publicly
announce any intention to, and must direct their respective
representatives not to:
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solicit, initiate or knowingly encourage any inquiries with
respect to, or the making or submission of, any alternative
proposal;
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participate in any negotiations regarding an alternative
proposal with, or furnish any nonpublic information regarding an
alternative proposal to any person that has made or to
Centexs knowledge is considering making an alternative
proposal;
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engage in discussions regarding an alternative proposal with any
person;
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submit to a vote of its stockholders, approve, endorse or
recommend any alternative proposal; or
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enter into any letter of intent or agreement in principle or any
agreement providing for any alternative proposal.
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Centex is also required to promptly notify Pulte if it receives
any alternative proposal, any indication or inquiry with respect
to or that would reasonably be expected to lead to an
alternative proposal, or any request for non-public information
relating to Centex or its subsidiaries, including in each case
the identity of the person making any such alternative proposal
or indication or inquiry and the material terms of any such
alternative proposal or indication or inquiry.
Centex may, however, before the Centex stockholders
approval of the proposal to approve the Merger Agreement, in
response to an alternative proposal which constitutes a superior
proposal or which its board of directors determines, in good
faith, could reasonably be expected to result in a superior
proposal (1) furnish nonpublic information to the third
party making such acquisition proposal and (2) engage in
discussions or negotiations with such third party with respect
to the alternative proposal, if, and only if, prior to so
furnishing such information or engaging in discussions or
negotiations, it receives from such third party an executed
confidentiality agreement with confidentiality provisions no
less favorable to it than the confidentiality agreement entered
into by Pulte and Centex.
Centex has also agreed to terminate any discussions relating to
an alternative proposal that occurred prior to the date of the
Merger Agreement. It has further agreed to not terminate, amend,
modify or waive any standstill provision of any confidentiality
or standstill agreement between Centex and any other person that
relates to a transaction that could constitute an alternative
proposal and to use reasonable best efforts to enforce any
existing standstill agreements with third parties, unless the
Centex board of directors determines in good faith, after
consultation with Centexs outside legal advisors, that
such action or inaction would be inconsistent with the
directors fiduciary obligations to Centex stockholders, or
is otherwise permitted by the section of the Merger Agreement
imposing restrictions on the solicitation of alternative
proposals.
An alternative proposal means any bona fide inquiry,
proposal or offer made by any person or group of persons prior
to the approval of the proposal to approve the Merger Agreement
by Centexs stockholders (other than a proposal or offer by
Pulte or its subsidiaries) for:
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a merger, reorganization, share exchange, consolidation,
business combination, recapitalization, dissolution, liquidation
or similar transaction involving Centex;
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a tender offer or exchange offer that, if completed, would
result in any person beneficially owning 20% or more of the
outstanding shares of Centex common stock;
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the acquisition by any person or group of persons of 20% or more
of the assets of Centex and its subsidiaries, taken as a
whole; or
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the direct or indirect acquisition by any person or group of
persons of 20% or more of the outstanding shares of Centex
common stock.
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A superior proposal means an alternative proposal
(with references to 20% being replaced by references to 50%)
made by any person or group of persons on terms that
Centexs board of directors determines in good faith, after
consultation with Centexs financial and legal advisors, is
more favorable to Centexs stockholders than the
transactions contemplated by the Merger Agreement.
Special
Meetings; Board Recommendations
Special
Meeting of Centex Stockholders; Recommendation of Centex Board
of Directors
Centex is required to hold a meeting of its stockholders to
consider the approval of the proposal to approve the Merger
Agreement. Centex has agreed to use reasonable best efforts to
solicit proxies in favor of the Merger Agreement, and its board
of directors has agreed to recommend that Centexs
stockholders approve the proposal to approve the Merger
Agreement, unless, in each case, it has made a change of
recommendation as described below.
The Merger Agreement provides that, at any time prior to, but
not after, the Centex stockholders approval of the
proposal to approve the Merger Agreement, Centexs board of
directors may change its recommendation that Centexs
stockholders approve the proposal to approve the Merger
Agreement if:
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Centex provides Pulte with written notice at least three
business days prior to making a change of recommendation that it
has received a superior proposal and specifying the material
terms and conditions of such superior proposal and the identity
of the person making such proposal, which notice period would be
extended by one business day to the extent any material
revisions are made to such superior proposal;
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following Centexs compliance with the advance notice
period described above, such proposal continues to constitute a
superior proposal; and
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it determines in good faith, after consultation with its outside
legal and financial advisors, that failing to do so would be
inconsistent with the directors fiduciary duties under
applicable law.
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Centexs board of directors may also withdraw, modify or
qualify its recommendation at any time prior to the approval of
the proposal to approve the Merger Agreement by Centexs
stockholders if it is required to do so under applicable law, so
long as it has provided Pulte notice of its intent to do so
three business days in advance.
Nothing in the Merger Agreement prohibits Centex or its board of
directors from taking and disclosing to its stockholders a
position contemplated by
Rules 14d-9
and 14e-2(a)
of the Exchange Act or from making any legally required
disclosure to Centexs stockholders or taking any position
with respect to the merger if, in the good faith judgment of the
Centex board of directors, after consultation with Centexs
outside legal advisors, failure to do so would be inconsistent
with the directors fiduciary obligations or obligations
under the rules and regulations of the NYSE. However, any such
action that would constitute a change of recommendation may only
be made in compliance with the provisions of the Merger
Agreement governing a change of recommendation.
Centexs board of directors may not recommend any
acquisition proposal (other than the Merger Agreement and the
transactions contemplated by the Merger Agreement), except as
specifically contemplated by, and in accordance with the
restrictions and obligations described above under
Non-Solicitation of Alternative
Transactions beginning on page 80.
Special
Meeting of Pulte Shareholders; Recommendation of Pulte Board of
Directors
Pulte is required to hold a meeting of its shareholders to
consider the proposal to approve the charter amendment to
increase the number of authorized shares of common stock and the
proposal to approve the issuance of shares in the merger and to
use reasonable best efforts to solicit proxies in favor of these
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proposals. The Pulte board of directors also must recommend that
Pultes shareholders approve the proposal to approve the
charter amendment to increase the number of authorized shares of
common stock and the proposal to approve the issuance of shares
in the merger, unless, in each case, it has made a change of
recommendation as described below.
Pultes board of directors may withdraw, modify or qualify
its recommendation at any time if it is required to do so under
applicable law, so long as it has provided Centex with written
notice at least three business days prior to doing so.
Efforts
to Complete the Merger
Both Pulte and Centex are required to use their reasonable best
efforts to take promptly all necessary or advisable actions
under applicable laws to complete the merger and the other
transactions contemplated by the Merger Agreement, including the
obtaining of necessary consents and approvals from governmental
entities and third parties and the defense of lawsuits
challenging the Merger Agreement or the transactions
contemplated by the Merger Agreement, subject to certain
exceptions.
The Merger Agreement provides that Pulte and Centex will make
any required filings under the HSR Act and will use reasonable
best efforts to take all actions that may be necessary or
advisable to complete the transaction, including taking all
further action as may be necessary to resolve any objections
that the FTC, the DOJ, state antitrust enforcement authorities
or other competition authorities may assert with respect to the
transactions contemplated by the Merger Agreement, including
(1) the sale, divestiture or disposition of assets or
businesses of Pulte or Centex and (2) otherwise taking or
committing to take actions that after the date of completion of
the merger would limit Pultes freedom of action with
respect to, or its ability to retain, one or more of its
businesses, product lines or assets, in each case as may be
required to avoid any prevention or material delay of the
closing. However, Pulte is not obligated to take any such action
that would have a Material Adverse Effect with respect to Pulte
or Centex.
Conduct
of Business Pending the Merger
Each of Pulte and Centex has agreed that, prior to the
completion of the merger or the termination of the Merger
Agreement, unless required by applicable law, consented to by
the other party (which consent may not be unreasonably withheld,
conditioned or delayed), contemplated or required by the Merger
Agreement, or previously agreed to by Centex and Pulte, it will
conduct its business in the ordinary course and use its
reasonable best efforts to:
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maintain the services of its current officers, key employees and
consultants;
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preserve its business organization and maintain its relations
and goodwill with customers, suppliers, distributors, creditors
and lessors;
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maintain existing insurance policies (or similar replacement
policies); and
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comply in all material respects with all applicable laws.
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Restrictions
on Centexs Interim Operations
Centex has further agreed to not take certain actions prior to
the completion of the merger or the termination of the Merger
Agreement unless the actions are required by applicable law,
consented to by Pulte (which consent may not be unreasonably
withheld, conditioned or delayed), contemplated or required by
the Merger Agreement, or previously agreed to by Centex and
Pulte. In particular, subject to the above exceptions, Centex
may not, and in certain cases may not permit any of its
subsidiaries to:
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pay or authorize any dividends or distributions, or permit any
of its non-wholly owned subsidiaries to do so, except for
dividends and distributions paid on a pro rata basis by
subsidiaries;
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redeem, repurchase, defease or cancel any indebtedness for
borrowed money, except (1) for transactions between Centex
and its wholly owned subsidiaries or between Centexs
wholly owned subsidiaries,
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(2) for certain required payments, or (3) with respect
to indebtedness of $1 million or less or certain other
indebtedness agreed to by Pulte;
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acquire or agree to acquire any other entity or business, or
make any capital expenditures, loans, advances or capital
contributions to, or investments in, any other entity with a
value of more than $15 million in the aggregate, except
(1) for certain ordinary course land acquisitions,
including finished lots in an amount not to exceed
$8 million individually or $150 million in the
aggregate or raw land in an amount not to exceed
$20 million in the aggregate, (2) as required by
existing contracts or (3) as between Centex and its wholly
owned subsidiaries or between Centexs wholly owned
subsidiaries;
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split, combine, reclassify, subdivide or amend the terms of any
of its or its subsidiaries capital stock, or issue or
authorize any other securities in respect of its or its
subsidiaries capital stock, except by a wholly owned
subsidiary of Centex that remains a wholly owned subsidiary
after the transaction;
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enter into any voting agreements with respect to its or its
subsidiaries capital stock;
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increase compensation or benefits of Centexs directors,
executive officers or employees, except as required by existing
agreements or benefit plans, as required by applicable law, or
as set forth under Employee Matters;
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enter into any employment, change of control, severance or
retention agreement with any employee, except as required by
existing agreements or benefit plans, as required by applicable
law, or as further described under Employee
Matters, and subject to certain additional exceptions for
newly-hired employees, promotions, employment agreements
terminable on less than thirty days notice without penalty
and ordinary course severance agreements with non-executive
officers;
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establish any plan, policy, program or arrangement for the
benefit of any current or former directors, officers or
employees or any of their beneficiaries, except as permitted
pursuant to the preceding bullet point, or for ordinary course
collective bargaining agreements or amendments;
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materially change financial accounting policies or procedures,
except as required by GAAP, SEC rule or policy or applicable law;
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except as required by a change in law, make, change or revoke
any material tax election, file any material amended tax return,
or settle or compromise any material tax liability or refund, if
such action could have an adverse effect that, individually or
in the aggregate, is material to Centex and its subsidiaries;
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adopt any material amendments to its or its subsidiaries
articles of incorporation, by-laws or similar applicable charter
documents;
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except for transactions between Centex and its wholly owned
subsidiaries or between Centexs wholly owned subsidiaries,
issue, sell, pledge, dispose of, grant, transfer or encumber,
any shares of Centexs or its subsidiaries capital
stock or other ownership interests, or any options or other
related securities, or take any action that would cause
otherwise unexercisable options to become exercisable (except as
permitted by the Merger Agreement or pursuant to certain options
or warrants outstanding on the date of the Merger Agreement),
other than certain issuances or sales of Centex common stock in
respect of certain Centex equity compensation awards, other
ordinary course grants of equity compensation awards in
accordance with Centexs customary long-term compensation
award practices and as set forth under
Employee Matters;
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except for transactions between Centex and its wholly owned
subsidiaries or between Centexs wholly owned subsidiaries,
purchase, redeem or otherwise acquire any shares of Centex or
its subsidiaries capital stock, or any options or other
related convertible or exchangeable securities;
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incur, assume, guarantee, prepay or otherwise become liable for
any indebtedness for borrowed money, except for
(1) intercompany indebtedness, (2) indebtedness to
replace, renew, extend, refinance or refund any existing
indebtedness, (3) certain guarantees of indebtedness as
permitted by the Merger Agreement, (4) indebtedness
incurred in the ordinary course of business pursuant to funding
facilities
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for Centexs financial services subsidiaries and
(5) guarantees, letters of credit or surety bonds for the
benefit of commercial counterparties in the ordinary course of
business;
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sell, pledge, lease, license, transfer, guarantee, exchange or
swap, mortgage (including securitizations), or otherwise dispose
of any material portion of its material properties or material
assets, including the capital stock of subsidiaries, except
(1) for sales of land or homes in the ordinary course of
business, (2) for transactions between Centex and its
wholly owned subsidiaries or between Centexs wholly owned
subsidiaries, (3) pursuant to certain existing agreements,
or (4) as may be required by applicable law or any
governmental entity in connection with the merger;
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adopt, adopt resolutions providing for, vote in support of,
consent to or approve any liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other
reorganization of Centex, its subsidiaries or any joint venture,
other than the merger and any other mergers or reorganizations
that would not result in material adverse tax consequences or
material loss of tax benefits or loss of any material asset;
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enter into any contract that would materially restrict, after
the completion of the merger, Pulte and its subsidiaries
(including Centex and its subsidiaries) from engaging or
competing in any line of business or in any geographic area;
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settle or compromise any litigation, or otherwise dispose of any
claim, liability, obligation or arbitration, unless the
settlement (1) does not require Centex to pay more than
$15 million individually or $75 million in the
aggregate (excluding from the aggregate total any individual
claim involving a payment of less than $1 million), and
(2) does not involve any material injunctive or other
non-monetary relief or impose material restrictions on the
business or operations of Centex;
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enter into interest rate swaps and other similar hedging
arrangements other than for purposes of offsetting a bona fide
exposure;
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issue or forgive any loans to directors, officers, employees,
contractors or any of their respective affiliates, except for
any such issuances that would not violate the Sarbanes-Oxley
Act; or
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authorize any of its subsidiaries or agree itself to take any of
the foregoing actions.
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Restrictions
on Pultes Interim Operations
In addition to the covenants described above, Pulte has agreed
to not take certain actions prior to the completion of the
merger or the termination of the Merger Agreement unless the
actions are required by applicable law, consented to by Centex
(which consent may not be unreasonably withheld, conditioned or
delayed), contemplated or required by the Merger Agreement, or
previously agreed to by Centex and Pulte. In particular, subject
to the above exceptions, Pulte may not and in certain cases may
not permit any of its subsidiaries to:
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except in the ordinary course of business, pay or authorize any
dividends or distributions, or permit any of its non-wholly
owned subsidiaries to do so, other than dividends and
distributions paid on a pro rata basis by subsidiaries;
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acquire or agree to acquire any entity or business, other than
acquisitions that could not reasonably be expected to make it
materially more difficult to obtain any authorization, consent
or approval required in connection with the merger and that
could not reasonably be expected to prevent or materially delay
or impede the merger or the other transactions contemplated by
the Merger Agreement;
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split, combine, reclassify, subdivide or amend the terms of any
of its or its subsidiaries capital stock, or issue or
authorize any other securities in respect of its or its
subsidiaries capital stock, except by a wholly owned
subsidiary of Centex that remains a wholly owned subsidiary
after the transaction;
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enter into any voting agreements with respect to its or its
subsidiaries capital stock;
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except for the amendment to Pultes Restated Articles of
Incorporation contemplated by the proposal to approve the
charter amendment to increase the number of authorized shares of
common stock and an amendment to the Certificate of Designation
for Pultes Series A Junior Participating Preferred
Shares and an amendment to increase the number of shares, adopt
or propose to adopt any material amendments to its or its
subsidiaries articles of incorporation or by-laws or
similar applicable charter documents;
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except for transactions between Pulte and its wholly owned
subsidiaries or between Pultes wholly owned subsidiaries,
issue, sell, pledge, dispose of, grant, transfer or encumber any
shares of Pultes or its subsidiaries capital stock
or other ownership interests, or any options or other related
securities, or take any action that would cause otherwise
unexercisable options to become exercisable (except as permitted
by the Merger Agreement or pursuant to certain options or
warrants outstanding on the date of the Merger Agreement), other
than certain issuances or sales of Pulte common stock in respect
of certain Pulte equity compensation awards, and other ordinary
course grants of equity compensation awards in accordance with
Pultes customary schedule;
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adopt, adopt resolutions providing for, vote in support of,
consent to or approve any liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other
reorganization of Pulte, its subsidiaries or any joint venture,
other than the merger and any other mergers or reorganizations
that would not result in material adverse tax consequences or
material loss of tax benefits or loss of any material
asset; or
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authorize any of its subsidiaries or agree itself to take any of
the foregoing actions.
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Employee
Matters
Under the Merger Agreement, after completion of the merger,
Pulte will provide to Centex employees not covered by collective
bargaining agreements compensation and benefits through
December 31, 2009 that are, in the aggregate, no less
favorable than the compensation and benefits provided to such
employees immediately prior to the completion of the merger
(without considering, for this purpose, benefits provided under
Centexs Salary Continuation Plan). Thereafter, it is
Pultes intention over the long term that Centex employees
and similarly situated employees of Pulte will be treated alike
in terms of compensation and benefits. Without limiting the
immediately preceding sentence, Pulte has agreed that, during
calendar year 2010, any change in the salary or annual incentive
bonus of any Centex employee not covered by a collective
bargaining agreement will not affect such Centex employee in a
manner which is disproportionate to any change in the salary or
annual incentive bonus of any similarly-situated Pulte employee
over that period. From and after December 31, 2009, Pulte
has agreed to provide each Centex employee not covered by
collective bargaining agreements with pension and welfare
benefits (including medical, dental, pharmaceutical and vision
benefits) that are, in the aggregate, no less favorable than
those provided to similarly-situated Pulte employees over that
period.
Additionally, Pulte has agreed, with respect to Centex
employees, to:
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credit years of service for all purposes under its employee
benefit plans and programs (but not for purposes of benefit
accrual under a defined benefit plan) to the same extent such
service was credited under similar Centex plans prior to the
completion of the merger, except where such credit would result
in duplication of benefits; provided, however, that prior
service will not be credited for purposes of the Seventy Year
Rule (as defined in Pultes equity compensation plans and
option award agreements issued thereunder) unless such employee
terminates employment after December 31, 2011;
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make each Centex employee immediately eligible to participate,
without any waiting time, in any Pulte plan providing benefits
to Centex employees after the completion of the merger, to the
extent coverage under such plan is comparable to a plan in which
the Centex employee participated immediately prior to the
completion of the merger;
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waive all limitations relating to pre-existing conditions and
exclusions under its welfare plans to the same extent that such
limitations would have been waived under a comparable Centex
plan, and
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recognize any deductible, co-insurance and maximum out-of-pocket
expenses incurred by such employees during the portion of the
plan year of the Centex plan ending on the date such
employees participation in the corresponding Pulte plan
begins as if such amounts had been paid under its plans;
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provide severance and paid time-off benefits through
December 31, 2010 that are no less favorable, in each case
on an
individual-by-individual
basis, than the severance and paid time-off benefits provided to
each Centex employee under the applicable Centex plan as of
immediately prior to the completion of the merger (except that
benefits under the Centex Salary Continuation Plan will be
disregarded for this purpose); and
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permit Centex, prior to the completion of the merger, to
allocate an amount not to exceed $2,000,000 for purposes of
(1) increasing base salaries (other than the base salaries
of non-employee directors and executive officers that
participate in the CIC Severance Plan) in connection with
individually targeted salary adjustments, promotional raises and
retention bonuses and (2) establishing a retention plan to
be allocated to the employees of Centex, the terms of which will
be determined in consultation with Pulte.
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Under the Merger Agreement, Centex is permitted to establish a
short-term incentive compensation program for the fiscal year
that commenced on April 1, 2009, and may establish, with
respect to each individual who participates in this program, a
target payout level no greater than 100% of the
individuals target payout under the applicable Centex
short-term incentive program for the fiscal year ended
March 31, 2009. If the merger is completed, Pulte has
agreed to pay to each Centex employee participating in this
program (except for employees who participate in Centexs
2003 Annual Incentive Compensation Plan) who is still employed
on December 31, 2009 a cash bonus equal to 75% of the
employees target bonus under the program as soon as
practicable after such date, but in no event later than
March 15, 2010. In addition, if the merger is completed,
Pulte has agreed to pay to each Centex employee (except for
employees who participate in Centexs 2003 Annual Incentive
Compensation Plan) who experiences a severance-qualifying
termination of employment prior to December 31, 2009 an
amount equal to 75% of the employees target bonus under
the program, prorated for the portion of the period between
April 1, 2009 and December 31, 2009 during which the
employee rendered services. In accordance with Centexs
2003 Annual Incentive Compensation Plan, each Centex senior
executive who participates in such plan will receive prior to
completion of the merger an amount equal to 100% of the
individuals target bonus for the fiscal year that
commenced on April 1, 2009, provided that any severance
payable to any such individual under the CIC Severance Plan
will, in the event that the individual experiences a termination
of employment prior to March 31, 2010, be reduced by the
portion of the bonus payment attributable to the portion of the
year in which the termination occurs that the participant does
not work. Pulte also has agreed to provide a bonus opportunity
to Centex employees for its fiscal year commencing
January 1, 2010 that is consistent with its other
commitments with respect to benefits and compensation for Centex
employees.
The Merger Agreement also provides that Centex may grant to each
of its employees a long-term incentive award consisting of a
number of restricted shares having a fair market value on the
date of grant no greater than 100% of the total value on the
date of grant of the aggregate long-term incentive awards
granted to the employee with respect to Centexs fiscal
year ended March 31, 2009. The Merger Agreement provides
that, if the merger is completed, 25% of the restricted shares
that were subject to these long-term incentive awards on the
grant date will be forfeited, 25% will vest on March 31,
2010, 25% will vest on March 31, 2011 and 25% will vest on
March 31, 2012. The Merger Agreement also provides that if,
following the completion of the merger, the holder of a
long-term incentive award experiences a severance-qualifying
termination of employment, the next installment of the award
will vest immediately. In addition, under the Merger Agreement,
Pulte has agreed that, for calendar year 2010, it will provide
Centex employees long-term incentive awards that are no less
favorable than the awards provided to similarly-situated Pulte
employees.
Management
and Board of Directors of Pulte After the Merger
Pulte has agreed to take all actions necessary to cause its
board of directors upon the completion of the merger to be
comprised of eight current Pulte directors and four current
Centex directors designated by Centex. Pulte has also agreed to
appoint each of the Centex designees to serve until Pultes
next annual
86
meeting of shareholders and to nominate each of the Centex
designees at its next annual meeting of shareholders, such that
one will be nominated to a term expiring at the second annual
meeting following the date of completion of the merger, one will
be nominated to a term expiring at the third annual meeting
following the date of completion of the merger and two will be
nominated to terms expiring at the fourth annual meeting
following the date of completion of the merger.
Upon completion of the merger, Mr. Dugas, currently
president and chief executive officer of Pulte, will also assume
the position of chairman of Pulte. The rest of Pultes
senior management team following completion of the merger will
include Steven C. Petruska as executive vice president and chief
operating officer, Roger A. Cregg as executive vice president
and chief financial officer, James R. Ellinghausen as executive
vice president, human resources, Debra W. Still as president and
chief executive officer of Pulte Mortgage LLC and Steven M. Cook
as senior vice president, general counsel and secretary, each of
whom currently hold such positions with Pulte. Mr. Eller
will join the Pulte board of directors as vice chairman and will
serve as a consultant to Pulte for two years following
completion of the merger. The Pulte board of directors will be
expanded to twelve directors and will include four members of
the current Centex board of directors, namely Mr. Eller,
Clint W. Murchison, III, James J. Postl and Thomas M. Schoewe,
and eight members of the current Pulte board of directors,
namely Pultes founder and current chairman William J.
Pulte, Mr. Dugas, Brian P. Anderson, Cheryl W. Grisé,
Debra J. Kelly-Ennis, David N. McCammon, Patrick J. OLeary
and Bernard W. Reznicek. See The Merger
Management and Board of Directors of Pulte After the
Merger beginning on page 70.
Other
Covenants and Agreements
Pulte and Centex have agreed to take certain additional actions
pursuant to the Merger Agreement. In particular, Pulte and
Centex have agreed to:
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afford the other party and its representatives reasonable access
during normal business hours throughout the period following the
date of the Merger Agreement and the earlier of the completion
of the merger or the date on which the Merger Agreement is
terminated to the personnel, properties, contracts, books and
records of the party granting such access, but only to the
extent that such access would not unreasonably disrupt the
operations of the party granting such access, cause a violation
of an existing agreement to which such party granting access is
a party or would cause a risk of a loss of privilege to the
disclosing party, or any of their subsidiaries or would
constitute a violation of any applicable law;
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take certain actions under federal and state securities laws
necessary to complete the transactions contemplated by the
Merger Agreement, including the filing by Centex of this joint
proxy statement/prospectus and the filing by Pulte of a
registration statement on
Form S-4
with the SEC, of which this joint proxy statement/prospectus is
a part;
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take any actions reasonably necessary to complete the
transactions contemplated by the Merger Agreement on the terms
contemplated by the Merger Agreement if any takeover statute
becomes applicable;
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use reasonable efforts to consult with each other before issuing
any press release or making any public announcement primarily
relating to the Merger Agreement or the transactions
contemplated by the Merger Agreement;
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take all steps required to cause dispositions of Centex common
stock or acquisitions of Pulte common stock resulting from the
transactions contemplated by the Merger Agreement by each
individual subject to the reporting requirements of
Section 16(a) of the Exchange Act to be exempt under
Rule 16b-3
of the Exchange Act;
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not take any action, or knowingly fail to take any action, that
would prevent or impede, or be reasonably likely to prevent or
impede the merger from qualifying as a
reorganization within the meaning of
Section 368(a) of the Internal Revenue Code; and
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not redeem the rights issued under their respective shareholder
or stockholder rights agreements, or amend or terminate such
rights agreements, subject to certain exceptions.
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Pulte has further agreed to:
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(1) maintain all rights to exculpation, indemnification and
advancement of expenses under Centexs organizational
documents or agreements, (2) indemnify Centexs
current and former directors, officers and employees against all
costs, expenses and other payments arising out of or relating to
any action or omission occurring before or after the completion
of the merger, and (3) for a period of six years from the
completion of the merger, maintain Centexs existing
directors and officers liability insurance or a
tail policy with annual premiums not in excess of
300% of the last annual premium paid by Centex;
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cause the shares of Pulte common stock to be issued in the
merger to be approved for listing on the NYSE; and
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maintain an office in Dallas, Texas as a home office extension
of Pultes Detroit headquarters, with certain support
functions to be conducted from such office.
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Termination
of the Merger Agreement
General
The Merger Agreement may be terminated and abandoned at any time
prior to the completion of the merger by the mutual written
consent of the Pulte and Centex. Also, either Pulte or Centex
may terminate the Merger Agreement and abandon the merger at any
time prior to the completion of the merger if:
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the merger does not occur on or before November 7, 2009,
unless the party seeking to terminate the Merger Agreement for
this reason fails to perform or comply in all material respects
with its covenants and agreements set forth in the Merger
Agreement;
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a governmental entity permanently enjoins or otherwise prohibits
the completion of the merger and such action becomes final and
non-appealable, so long as the party seeking to terminate the
Merger Agreement for this reason has used its reasonable best
efforts to remove or prevent such action;
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the Centex special meeting concludes without the approval of the
proposal to approve the Merger Agreement by Centexs
stockholders, except that Centex may not terminate the Merger
Agreement for this reason if the failure to obtain the approval
is caused by an action or failure to act by Centex that
constitutes a material breach of the Merger Agreement; or
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the Pulte special meeting concludes without the approval of the
proposal to approve the charter amendment to increase the number
of authorized shares of common stock and proposal to approve the
issuance of shares in the merger by Pultes shareholders,
except that Pulte may not terminate the Merger Agreement for
this reason if the failure to obtain the approvals is caused by
an action or failure to act by Pulte that constitutes a material
breach of the Merger Agreement.
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Centex may terminate the Merger Agreement at any time prior to
the approval of the proposal to approve the Merger Agreement by
Centexs stockholders in light of a superior proposal if:
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Centex is not in material breach of the section of the Merger
Agreement imposing restrictions on the solicitation of
alternative proposals, including its obligation to notify Pulte
of the superior proposal, see Non-Solicitation
of Alternative Transactions beginning on page 80;
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the superior proposal continues to constitute a superior
proposal at the conclusion of a three business day period that
begins with notification to Pulte of the superior proposal,
subject to any extensions as contemplated by the Merger
Agreement; and
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the Centex board of directors determines in good faith, after
consultation with Centexs outside legal and financial
advisors, that recommending the proposal to approve the Merger
Agreement, or failing to change such recommendation in a manner
adverse to Pulte, would be inconsistent with their fiduciary
obligations to Centex stockholders under applicable law.
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In addition, Centex may terminate the Merger Agreement at any
time prior to the completion of the merger if:
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Pulte breaches or fails to perform in any material respect any
of its representations, warranties, covenants or other
agreements contained in the Merger Agreement, which breach or
failure to perform (1) would result in a failure of any of
the conditions to Centexs obligation to complete the
merger, see Conditions to Completion of the
Merger beginning on page 78, and (2) cannot be
cured by November 7, 2009, so long as Centex provides Pulte
with at least 30 days prior written notice of its
intent to terminate the Merger Agreement for this reason; or
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Pultes board of directors changes its recommendation that
Pultes shareholders approve the proposal to approve the
charter amendment to increase the number of authorized shares of
common stock and proposal to approve the issuance of shares in
the merger.
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Pulte may terminate the Merger Agreement at any time prior to
the completion of the merger if:
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Centex breaches or fails to perform in any material respect any
of its representations, warranties, covenants or other
agreements contained in the Merger Agreement, which breach or
failure to perform (1) would result in a failure of any of
the conditions to Pultes obligation to complete the
merger, see Conditions to Completion of the
Merger beginning on page 78, and (2) cannot be
cured by November 7, 2009, so long as Pulte provides Centex
with at least 30 days prior written notice of its
intent to terminate the Merger Agreement for this reason; or
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the Centex board of directors changes its recommendation that
Centexs stockholders approve the Merger Agreement, or
recommends the approval or adoption of any alternative proposal
to Centexs stockholders.
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Termination
Fees
Centex would be required to pay Pulte a termination fee of
$24 million if Pulte or Centex terminates the Merger
Agreement because Centex stockholders, following a favorable
recommendation to approve the proposal to approve the Merger
Agreement by Centexs board of directors, do not approve
this proposal at the Centex special meeting.
Centex would be required to pay Pulte a termination fee of
$48 million in the following circumstances:
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if Pulte terminates the Merger Agreement because Centexs
board of directors has changed its recommendation of the merger
or recommended the approval or adoption of an alternative
proposal to Centexs stockholders;
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if Centex terminates the Merger Agreement in light of a superior
proposal;
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if Pulte or Centex terminates the Merger Agreement because
Centex stockholders, following a change of recommendation of the
proposal to approve the Merger Agreement by Centexs board
of directors, do not approve this proposal at the Centex special
meeting;
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if (1) Pulte or Centex terminates the Merger Agreement
because Centex stockholders do not approve the proposal to
approve the Merger Agreement at the Centex special meeting,
(2) prior to such termination an alternative proposal in
respect of at least 50% of Centex was publicly proposed and
(3) within 12 months of such termination, Centex
enters into a definitive agreement regarding, or otherwise
completes, any such alternative proposal in respect of at least
50% of Centex; or
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if (1) Pulte or Centex terminates the Merger Agreement
because the merger has not occurred on or before
November 7, 2009 or Pulte terminates the Merger Agreement
because of an intentional breach of the Merger Agreement by
Centex, (2) prior to such termination an alternative
proposal in respect of at least 50% of Centex was publicly
proposed and (3) within 12 months of such termination,
Centex enters into a definitive agreement regarding, or
otherwise completes, any such alternative proposal in respect of
at least 50% of Centex.
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Pulte would be required to pay Centex a termination fee of
$51 million if Pulte or Centex terminates the Merger
Agreement because Pultes shareholders, following a
favorable recommendation by Pultes board of directors to
approve the proposal to approve the charter amendment to
increase the number of authorized shares of common stock and the
proposal to approve the issuance of shares in the merger, do not
approve both of these proposals at the Pulte special meeting.
Pulte would be required to pay Centex a termination fee of
$102 million in the following circumstances:
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if Centex terminates the Merger Agreement because Pultes
board of directors has changed its recommendation of the
proposal to approve the charter amendment to increase the number
of authorized shares of common stock or proposal to approve the
issuance of shares in the merger; or
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if Pulte or Centex terminates the Merger Agreement because Pulte
shareholders, following a change of recommendation of the
proposal to approve the charter amendment to increase the number
of authorized shares of common stock or proposal to approve the
issuance of shares in the merger by Pultes board of
directors, do not approve both of these proposals at the Pulte
special meeting.
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Effect
of Termination
If the Merger Agreement is terminated as described above, the
Merger Agreement will terminate (except for the provisions
governing payment of the termination fees and certain other
miscellaneous provisions), and neither Pulte nor Centex will be
liable to the other except for liability arising out of an
intentional breach of the Merger Agreement, for fraud or as
provided for in the confidentiality agreement between Pulte and
Centex.
Representations
and Warranties
The Merger Agreement contains customary representations and
warranties of Pulte, Centex and Pi Nevada Building Company
relating to their respective businesses. These representations
and warranties have been made solely for the benefit of the
other party or parties, and such representations and warranties
should not be relied on by any other person. In addition, such
representations and warranties:
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are qualified in their entirety by the information disclosed by
the applicable party in documents filed with the SEC since
January 1, 2007 and prior to the date of the Merger
Agreement, excluding any risk-factor disclosure, disclosure of
risks in any forward-looking statements disclaimer
and any other statements that are similarly predictive or
forward looking in nature;
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have been further qualified by information contained in
disclosure schedules that the parties exchanged in connection
with the execution of the Merger Agreement;
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will not survive completion of the merger or the termination of
the Merger Agreement;
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are in certain cases subject to a materiality standard described
in the Merger Agreement which may differ from what may be viewed
as material by you; and
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are in certain cases, qualified by the knowledge of the parties
making such representations and warranties.
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Each of Pulte, Centex and Pi Nevada Building Company has made
customary representations and warranties relating to, among
other things:
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organization and standing;
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capital structure;
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corporate power and authority;
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conflicts, consents and approvals;
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SEC filings and internal controls and procedures;
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the absence of any undisclosed liabilities;
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compliance with laws and the possession of necessary permits;
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environmental matters;
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employee benefit plans;
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absence of certain changes or events;
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investigations and litigation;
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disclosure documents;
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tax matters;
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employment and labor matters;
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intellectual property;
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real property;
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in the case of Centex, the required vote of Centex stockholders
to approve the proposal to approve the Merger Agreement, and, in
the case of Pulte, the required votes of Pulte shareholders to
approve the proposal to approve the charter amendment to
increase the number of authorized shares of common stock and
proposal to approve the issuance of shares in the merger;
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opinion of such partys financial advisor;
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material contracts;
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brokerage and finders fees and expenses;
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insurance;
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tax treatment of the merger; and
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the taking of all actions necessary to render such partys
rights agreement inapplicable to the merger and the voting
agreements, and, in the case of Centex, to cause its rights
agreement to terminate as of the time the merger is completed.
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Each of Pulte and Pi Nevada Building Company has also made
representations and warranties relating to the lack of ownership
of shares of Centex.
Centex has also made representations and warranties relating to
the inapplicability of state anti-takeover laws to the Merger
Agreement.
Expenses
Each party is required to pay its own costs and expenses
incurred in connection with the merger, the Merger Agreement and
the transactions contemplated thereby, except that Pulte will
pay all fees in respect of the filing under the HSR Act, and
Pulte and Centex will share equally all costs and expenses
incurred in connection with the printing, filing and mailing of
this joint proxy statement/prospectus (including applicable SEC
filing fees).
Governing
Law; Jurisdiction; Specific Enforcement
The Merger Agreement is governed by, and is to be construed in
accordance with, the laws of Delaware, except that issues
involving the completion and effects of the merger are governed
by the laws of Nevada to the extent the application of Nevada
law is mandatory. All legal actions or proceedings with respect
to the Merger Agreement are to be brought and determined in the
Delaware Court of Chancery or, if the Delaware Court of Chancery
declines to accept jurisdiction over a particular matter, any
state or federal court within the State of Delaware. The parties
to the Merger Agreement are entitled to injunctions to prevent
breaches of the Merger Agreement and to specifically enforce the
terms of the Merger Agreement.
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Amendments
and Waivers
Pulte, Centex and Pi Nevada Building Company may amend or waive
any provision of the Merger Agreement at any time prior to the
completion of the merger. However, any amendment or waiver that
is made following the Centex special meeting will be subject to
approval by Centex stockholders if further approval is required
by applicable law or the rules and regulations of the NYSE.
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AMENDMENTS
TO THE PULTE HOMES, INC.
RESTATED ARTICLES OF INCORPORATION
At the Pulte special meeting, Pulte shareholders will consider
two proposed amendments to Pultes Restated Articles of
Incorporation, which are described below. A copy of the current
Pulte Restated Articles of Incorporation is attached to this
joint proxy statement/prospectus as Annex D. A copy of the form
of amendment to Pultes Restated Articles of Incorporation,
which reflects the proposed amendment to increase the number of
authorized shares of Pulte common stock, is attached to this
joint proxy statement/prospectus as Annex E. A copy of the form
of amendment to Pultes Restated Articles of Incorporation,
which reflects the proposed amendment to change Pultes
corporate name, is attached to this joint proxy
statement/prospectus as Annex F.
Proposal
to Approve the Charter Amendment to Increase the Number of
Authorized Shares of Common Stock
The Pulte board of directors has proposed, subject to
shareholder approval, to amend Pultes Restated Articles of
Incorporation to increase the number of shares of Pulte common
stock authorized for issuance from 400 million to
500 million. If the proposal to approve the charter
amendment to increase the number of authorized shares of common
stock is approved by Pultes shareholders, Pulte would only
file the certificate of amendment to Pultes Restated
Articles of Incorporation reflecting the increased number of
authorized shares of common stock with the Michigan Department
of Energy, Labor and Economic Growth immediately prior to the
completion of the merger, but if the Merger Agreement is
terminated (and the merger is not completed), Pulte will not
file the certificate of amendment to Pultes Restated
Articles of Incorporation reflecting the increased number of
authorized shares of common stock with the Michigan Department
of Energy, Labor and Economic Growth and the amendment will not
become effective. If Pulte files the certificate of amendment
reflecting the increased number of authorized shares of common
stock with the Michigan Department of Energy, Labor and Economic
Growth and the merger is not completed, Pulte reserves the right
to abandon the amendment in accordance with the provisions of
the MBCA.
As of the Pulte record date, Pulte had 258,603,672 shares
of Pulte common stock issued and outstanding. As of such date,
there were 13,778,847 shares of Pulte common stock reserved
for issuance in respect of Pulte stock options. Based on the
number of shares of Centex common stock outstanding as of the
Centex record date, if the merger is completed, Pulte will issue
approximately 122,186,622 additional shares of Pulte common
stock to the Centex stockholders. Based on the options, other
equity-based awards and arrangements to purchase or issue Centex
common stock as of the Centex record date, if the merger is
completed, Pulte will reserve for issuance approximately
5.9 million additional shares of Pulte common stock. The
approval of the proposal to approve the charter amendment to
increase the number of authorized shares of common stock is
required to complete the merger because the existing number of
authorized but unissued shares of Pulte common stock is not
sufficient to support the number of shares of Pulte common stock
required to be issued to the holders of Centex common stock and
Centex equity-based awards pursuant to the terms of the Merger
Agreement. Although Pultes management currently has no
definitive plans for the issuance of any additional authorized
shares, the authorization of additional shares would permit the
issuance of shares for future stock dividends, stock splits,
possible acquisitions, stock option plans, and other appropriate
corporate purposes. The additional shares of Pulte common stock
will not be entitled to preemptive rights nor will existing
shareholders have any preemptive right to acquire any of those
shares when issued. Approval of the proposal to approve the
charter amendment to increase the number of authorized shares of
common stock requires the affirmative vote of a majority of the
outstanding shares of Pulte common stock entitled to vote on the
proposal. Pulte shareholders are entitled to one vote for each
share of Pulte common stock held as of the record date.
Abstentions and broker non-votes will have the same effect as a
vote against the amendment.
Under the Merger Agreement, approval of the proposal to approve
the charter amendment to increase the number of authorized
shares of common stock is a condition to the completion of the
merger. If the proposal to approve the charter amendment to
increase the number of authorized shares of common stock is not
approved, the merger will not be completed even if the proposal
to approve the issuance of shares in the merger is approved by
Pulte shareholders and the proposal to approve the Merger
Agreement is approved by Centex stockholders.
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The Pulte board of directors unanimously recommends a vote
FOR the proposal to approve the charter
amendment to increase the number of authorized shares of common
stock.
Proposal
to Approve the Charter Amendment to Change Pultes
Corporate Name
The Pulte board of directors has proposed, subject to
shareholder approval, to amend Pultes Restated Articles of
Incorporation to change Pultes corporate name from
Pulte Homes, Inc. to PulteGroup, Inc.
Pulte believes that the new corporate name will better reflect
the companys new branding strategy, which it expects to
implement in the months following the Pulte special meeting,
whether or not the merger is completed.
Approval of the proposal to approve the charter amendment to
change Pultes corporate name by Pultes shareholders
is not a condition to the completion of the merger. Subject to
approval of this proposal by Pultes shareholders, Pulte
intends to change its corporate name regardless of whether or
not the merger is completed. Accordingly, if the proposal to
approve the charter amendment to change Pultes corporate
name is approved by Pultes shareholders, Pulte would file
a certificate of amendment to Pultes Restated Articles of
Incorporation reflecting the change of Pultes corporate
name with the Michigan Department of Energy, Labor and Economic
Growth at the appropriate time during the implementation of its
new branding strategy.
Approval of the proposal to approve the charter amendment to
change Pultes corporate name requires the affirmative vote
of a majority of the outstanding shares of Pulte common stock
entitled to vote on the proposal. Pulte shareholders are
entitled to one vote for each share of Pulte common stock held
as of the record date. Abstentions and broker non-votes will
have the same effect as a vote against the amendment.
The Pulte board of directors unanimously recommends a vote
FOR the proposal to approve the charter
amendment to change Pultes corporate name.
94
UNAUDITED
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined financial
statements, which we refer to as the pro forma financial
statements, have been derived from the historical consolidated
financial statements of Pulte and Centex, both of which are
incorporated by reference into this joint proxy
statement/prospectus. The transaction is accounted for by
applying the acquisition method under Statement of Financial
Accounting Standards No. 141(R), Business
Combinations, which we refer to as SFAS 141(R), as
outlined in the accompanying notes to the unaudited pro forma
condensed combined financial statements, which we refer to as
the pro forma notes. In accordance with SFAS 141(R), Pulte
has been treated as the accounting acquirer in the proposed
transaction. See The Merger Accounting
Treatment beginning on page 69.
The transactions reflected in the pro forma financial statements
include (1) the exchange of all outstanding shares of
Centex common stock at the exchange ratio; (2) the exchange
of all of Centexs vested and unvested restricted stock for
Pulte common stock; (3) the exchange of unvested and vested
Centex stock options for vested Pulte stock options with
adjustments to reflect the exchange ratio; and (4) the
conversion of vested and unvested Centex restricted stock units.
The following unaudited pro forma condensed combined balance
sheet at March 31, 2009, which we refer to as the pro forma
balance sheet, is presented on a basis to reflect the merger and
related transactions as if they had occurred on March 31,
2009. The pro forma balance sheet is prepared by combining the
balance sheet at March 31, 2009 for both Pulte and Centex.
The following unaudited pro forma condensed combined statements
of operations, which we refer to as the pro forma statements of
operations, for the three months ended March 31, 2009 and
year ended December 31, 2008 are presented on a basis to
reflect the merger and related transactions as if they had
occurred on January 1, 2008. The unaudited pro forma
statement of operations for the three months ended
March 31, 2009 is prepared by combining the statement of
operations of Pulte for the three months ended March 31,
2009 with the statement of operations for Centex for the three
months ended March 31, 2009 and then making pro forma
adjustments. The unaudited pro forma statement of operations for
the twelve months ended December 31, 2008 is prepared by
combining the statement of operations of Pulte for the year
ended December 31, 2008 with the statement of operations
for Centex for the twelve months ended December 31, 2008
and then making pro forma adjustments. See Note (a) to the
pro forma financial statements for additional information.
The process of valuing Centexs tangible and intangible
assets and liabilities, as well as evaluating accounting
policies for conformity, is still in the preliminary stages.
Accordingly, the purchase price allocation adjustments included
in the pro forma financial statements are preliminary and have
been made solely for the purpose of providing these pro forma
financial statements. For purposes of the pro forma financial
statements, Pulte and Centex have made preliminary allocations,
where sufficient information is available to make a fair value
estimate, to those tangible and intangible assets to be acquired
and liabilities to be assumed based on preliminary estimates of
their fair value as of March 31, 2009. For those assets and
liabilities where sufficient information is unavailable to make
a reasonable estimate of fair value, the pro forma financial
statements reflect the carrying value of these assets and
liabilities at March 31, 2009. Any remaining unallocated
purchase consideration has been reflected as excess purchase
price (goodwill) in the pro forma balance sheet at
March 31, 2009. In the event the fair value of the acquired
net assets exceeds the purchase price, the amount of such excess
would be recorded as a gain in post-merger operating results in
accordance with SFAS 141(R). A final determination of the
acquired fair values, which cannot be made prior to completion
of the merger, will be based on the actual fair value of Pulte
common stock and the net assets of Centex that exist on the date
of the completion of the merger. Pulte currently expects that
the process of determining fair value of the tangible and
intangible assets acquired and liabilities assumed will be
completed within one year of completion of the merger. Material
revisions to Pultes preliminary estimates could be
necessary as more information becomes available through the
completion of this final determination. The actual amounts
recorded following the completion of the merger may be
materially different from the information presented in these pro
forma financial statements due to a number of factors, including:
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timing of completion of the merger;
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changes in Pultes share price;
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changes in the fair value of Centexs senior notes;
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changes in Centexs share price as it relates to the
settlement of Centex performance units;
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changes in the net assets of Centex;
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changes in the market conditions and financial results impacting
cash flow projections in the valuation; and
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other changes in market conditions which impact the fair value
of Centexs net assets.
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The pro forma financial statements should be read in conjunction
with the pro forma notes. The pro forma financial statements and
pro forma notes were based on, and should be read in conjunction
with:
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Pultes unaudited consolidated financial statements for the
three months ended March 31, 2009 and the related notes in
Pultes Quarterly Report on
Form 10-Q
for the three months ended March 31, 2009;
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Pultes historical audited consolidated financial
statements for the year ended December 31, 2008 and the
related notes included in Pultes Annual Report on
Form 10-K
for the year ended December 31, 2008;
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Centexs historical audited financial statements for the
years ended March 31, 2009 and 2008 and the related notes
included in Centexs Annual Report on
Form 10-K
for the years ended March 31, 2009 and 2008; and
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Centexs unaudited consolidated financial statements for
the nine months ended December 31, 2008 and the related
notes in Centexs Quarterly Report on
Form 10-Q
for the nine months ended December 31, 2008.
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These reports are incorporated by reference into this joint
proxy statement/prospectus.
Pultes and Centexs historical consolidated financial
information has been adjusted in the pro forma financial
statements to give effect to pro forma events that are
(1) directly attributable to the merger; (2) factually
supportable; and (3) with respect to the pro forma
statements of operations, expected to have a continuing impact
on the combined results. The pro forma financial statements do
not reflect any revenue enhancements or any cost savings from
operating efficiencies, synergies or other restructurings that
could result from the merger. The pro forma financial statements
also do not reflect any restructuring charges to be incurred in
connection with the merger, with the exception of estimated
severance costs related to certain members of Centexs
senior management that will be incurred concurrently with or
shortly after completion of the merger. Pulte is continuing to
assess the magnitude of the facilities and systems consolidation
costs and other non-recurring employment-related costs that will
be required in connection with the merger and, therefore, is
unable to provide an estimate of these costs at this time. Such
costs are expected to primarily relate to cost saving measures
in corporate and field overhead. Therefore, these charges are
excluded from the pro forma financial statements as they are not
factually supportable at this time. In accordance with
SFAS 141(R), these costs will be expensed as incurred.
In addition, the pro forma financial statements do not reflect
any adjustments related to expected interest savings from
retirements of debt subsequent to completion of the merger.
Certain of these interest savings from retirements of debt are
expected to occur prior to December 31, 2009. The specific
amount and series of debt obligations to be retired for each
company will be determined in the future and will be
significantly influenced by future market conditions.
Accordingly, the potential impact of any retirement of debt has
been excluded from the pro forma financial statements as the
amount of such potential impact is not factually supportable at
this time.
The pro forma adjustments are based upon available information
and assumptions that the managements of Pulte and Centex believe
reasonably reflect the merger. We present the pro forma
financial statements for informational purposes only. The pro
forma financial statements are provided for illustrative
purposes only and do not purport to represent what the actual
consolidated results of operations or the consolidated financial
position of Pulte would have been had the merger occurred on the
dates assumed, nor are they necessarily indicative of future
consolidated results of operations or financial position.
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Pulte and
Centex Unaudited
Pro Forma Condensed Combined Balance Sheet
March 31, 2009
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Condensed As
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Adjusted Centex
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Pro Forma
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Pro Forma
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Historical Pulte
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(b)(c)
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Adjustments
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Combined
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(amounts in thousands)
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ASSETS
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