Cavco Ind. to Acquire MH Builder-Retailer Solitaire Homes

PHOENIX, Ariz. – Cavco Industries Inc (Nasdaq: CVCO) announced that it has signed a binding offer to acquire the business of Solitaire Homes, Inc. and other related entities, including its four manufacturing facilities, 22 retail locations and its dedicated transportation operations. Solitaire Homes is headquartered in Duncan, Oklahoma. For the calendar year ending Dec. 31, 2021, Solitaire Homes had pro-forma earnings before taxes, depreciation and amortization of $16.5 million.

Solitaire has over 950 employees and operates manufacturing facilities in New Mexico, Oklahoma and Mexico. The New Mexico and Mexico facilities produced nearly 1,600 homes in calendar year 2021. The Duncan, Oklahoma facility was recently reopened in 2022. For its two Mexico facilities, a dedicated warehouse in Presidio, Texas acquires and stores raw materials, which are then assembled directly across the border in Ojinaga, Mexico. Retail stores are located in New Mexico, Oklahoma and Texas and exclusively sell homes built by Solitaire Homes manufacturing facilities. Solitaire Homes’ transportation business enables them to control the delivery of its homes and reduces reliance on third parties.

The purchase price totals $93 million, before certain adjustments that will be determined upon close of the transaction. Cavco expects to fund the acquisition entirely with cash on hand. The transaction is expected to close early in the Company’s fourth quarter of fiscal year 2023, subject to applicable regulatory approvals and the satisfaction of certain customary conditions.

Cavco’s President and Chief Executive Officer Bill Boor said, “Pete Hogstad and the Elliott family have built a strong company with a well-deserved reputation for quality homes. The addition of Solitaire Homes to our existing manufacturing and retail system strengthens our position in the Southwest and expands our manufacturing capabilities into Mexico. We look forward to working with the Solitaire team to continue building on their record of success.”

Solitaire Homes’ President D.J. Hogstad commented, “We are very pleased to be joining Cavco. The combination of our companies will provide new and exciting opportunities to continue the growth we have experienced in recent years, not only for our appreciated customers, but also our valued employees.”

Highlights of the proposed transaction:

  • Financial Impact: Cavco expects this proposed acquisition to be accretive to earnings and cash flow from operations.
  • Cross-Border Manufacturing: Solitaire Homes has successfully operated a cross border plant for over thirteen years, providing low cost production for the U.S. market.
  • Geographic Footprint and Complementary Product: The addition of the Solitaire Homes plants provides added coverage and scale in the Southwest with high quality products that complement our existing home offerings. The geographic and product positioning fits extremely well with our existing network.
  • Potential for operational and revenue synergies: Shared best practice implementation will create significant manufacturing cost and efficiency improvements. Additionally, product mix across the combined retail network will be optimized.
  • Capital Allocation: Following this strategic deployment of existing cash, Cavco will still maintain a significant cash position available for other strategic investments.

TN Capital Advisors LLC (True North) acted as exclusive financial advisor and Polsinelli served as legal advisor to Cavco for the transaction. Hartzog Conger Cason served as legal advisor to Solitaire Homes.