PAI Partners enters exclusive talks with French homebuilder

The French private equity firm has started exclusive negotiations to buy Kaufman et Broad, in the latest example of frenetic M&A activity in the European homebuilding sector.

French private equity group PAI Partners has entered into exclusive talks to take a 50.01 percent stake in Kaufman et Broad, a homebuilder listed on the Paris stock exchange.

PAI is hoping to buy the shares from Kaufman’s parent company in the US, KB Home, and the group’s chairman Guy Nafilyan. The offer price of €55 per share gives the French firm a market capitalization of approximately €1.3 billion ($1.8 billion).

If PAI’s bid succeeds, sources close to the deal said the buyout firm would make an offer to minority shareholders as soon as possible after acquiring the majority stake.

Kaufman et Broad had first quarter profits of €15.8 million, up 11 percent from €11.1 million last year, accompanied by a 10.1 percent rise in sales to €285.3 million from €259.1 million.

Last week, KB Home said it was considering an offer of €53.13 per share for its 49 percent stake in its French affiliate.

At 1215 CET, Kaufman et Broad shares were down 3.07 percent to €58.64.

The European homebuilding sector is proving popular with private equity firms. Swedish firm Industri Kapital recently sold Prevesta for SKr 1.9 billion (€204 million; $276 million) generating a return of nearly ten times its initial investment. West Coast Capital, Tom Hunter’s investment vehicle, won out over a Permira-led consortium to buy UK group McCarthy & Stone last year for $1.1 billion, and went on to acquire Crest Nicholson for £715 million in March.