Mattamy Homes to buy Monarch Corporation

This story has been updated

In one fell swoop, Mattamy Homes – already Canada’s largest new home builder, though primarily in lowrise homes – has also become a major player in the highrise business.

Mattamy Homes Ltd. has announced that it has entered into an agreement to purchase Monarch Corporation, the Canadian division of U.S. homebuilder Taylor Morrison Home Corp. The net cash purchase price will be determined based on the Dec. 31, 2014 Monarch balance sheet and certain agreed-upon adjustments. The purchase price is currently estimated to be approximately CAD$330 million, net of cash distributed to the vendor prior to close. The deal is expected to formally close in the first quarter of 2015 and is subject to customary closing conditions, including approval by the Canadian Competition Bureau.

Mattamy Homes' Hawthorne South Village in Milton is adjacent to the Escarpment

Mattamy Homes’ Hawthorne South Village in Milton is adjacent to the Escarpment

“Monarch is a leading builder in Ontario, with an exceptional reputation and portfolio of assets,” says Peter Gilgan, founder and CEO of Mattamy. “The addition of the business to Mattamy Homes aligns well with our growth strategy, and we look forward to working with the talented Monarch team as we enhance our already significant footprint in Ontario and enter into the highrise market.”

Mattamy Homes founder and CEO Peter Gilgan

Mattamy Homes founder and CEO Peter Gilgan

So, what might this mean for these brands, both iconic names in their respective home building markets?

“In the short-term, it really is business as usual for the two companies – Mattamy operates as Mattamy and Monarch as Monarch,” Brent Carey, vice-president at Mattamy, told New Home & Condo Guide. “Once the deal closes, we will be taking a strategic and thoughtful approach to evaluating how integration will happen, including of the brands. It’s fair to say that we’ll be looking at a number of options as we decide what’s the best future course of action for the organization and the brand.”

Following closing of the transaction, Mattamy and Monarch will spend the following months evaluating how and to what extent the two organizations will be integrated. The intent is to have made the necessary operational decisions by the beginning of Mattamy’s 2016 fiscal year (June 1, 2015).

Besides gaining a significant entry into the highrise market with this one deal, part of the appeal for Mattamy is land. In Ontario, land availability is increasingly becoming an issue for builders, as are rapidly rising acquisition costs. A run-up in land prices in the province in the last few years is reportedly one of the reasons Monarch parent firm, U.S. home builder Taylor Morrison Home Corp., decided to sell its Canadian division. Margins on Monarch’s new lands have been less impressive than those reported for older lands, Mattamy says, and Taylor Morrison was not prepared to make the necessary investments to sustain what traditionally has been a vibrant business.

By acquiring Monarch, Mattamy quickly gains Monarch’s existing land tracts in the GTA, Kitchener and Ottawa, most of which have been approved for development.

Park at Mattamy Homes' Hawthorne Village in Milton, Ont.

Park at Mattamy Homes’ Hawthorne Village in Milton, Ont.

“This is an exciting time for Mattamy, as well as Brad Carr, our Canadian president, and me,” says Brian Johnston, chief operating officer of Mattamy Homes. “We both spent our formative years at Monarch and expect the deal to provide valuable synergies to Mattamy. I would highlight that this acquisition, in one stroke, puts us in the highrise business in a significant way. Highrise represents more than 50 per cent of new home sales in the Greater Toronto Area and so is a major positive to this transaction.”

For homebuyers, there’s not likely to be any immediate impact of the deal.

“There is no immediate change for Mattamy or Monarch homebuyers as a result of this announcement,” says Carey. “For now it’s business as usual. We will have more answers as we carry out the work of evaluating how and to what extent the two organizations will be integrated.”

Mattamy Homes is one of the largest privately owned builders in North America and is Canada’s largest new home builder, with operations across Canada and the United States. Mattamy has built more than 70,000 homes in hundreds of communities. In Canada, those communities stretch across the Greater Toronto Area, as well as in Ottawa, Calgary and Edmonton. In the U.S., the company is represented in seven metropolitan areas: Minneapolis-St. Paul, Charlotte, Phoenix, Tucson, Jacksonville, Orlando and Tampa-Sarasota.



Of course you can unsubscribe at any time

More News & Inspiration