Cavco Industries, Inc. (Nasdaq: CVCO) (“Cavco” or the “Company”) announced today that it has signed a binding offer to acquire the business and certain assets and liabilities of The Commodore Corporation (“Commodore”), including its six manufacturing facilities and two wholly owned retail locations. Commodore is the largest independent builder of manufactured and modular housing in the United States, operating under a variety of brand names such as Commodore Homes of Pennsylvania, Commodore Homes of Indiana, Colony Homes, MidCountry Homes, Pennwest Homes and R-Anell Homes. Commodore has over 1,200 employees and operates across the Northeast, Midwest and Mid-Atlantic regions, with wholly owned retail stores in Indiana and New York. In addition to manufacturing, Commodore also participates in commercial lending operations with its dealers that Cavco will also acquire and continue the existing programs. For the last 12 months ended March 31, 2021, Commodore generated net sales of approximately $258 million and sold over 6,600 modules, equating to over 3,700 homes.
The purchase price totals $153 million, before certain adjustments that will be determined upon close of the transaction. The estimated cash outlay is $140 million after adjustments and including transaction fees. Cavco expects to fund the acquisition entirely with cash on hand.
Bill Boor, Cavco President and Chief Executive Officer, said, “During the acquisition process, we have developed a tremendous respect for what has been accomplished at Commodore under Barry Shein’s leadership. Their reputation for quality, design, customer relationships, and integrity is very consistent with Cavco’s philosophy and approach to doing business. We are extremely excited to work with the Commodore leadership and employees as we leverage best practices and technologies across the combined manufacturing network. Commodore’s market presence is a strategic extension of our current footprint, providing a platform for additional growth in the Northeast.”
Barry Shein, President and Chief Executive Officer of Commodore, commented, “What was most important to me and the other members of Commodore’s leadership was to find the best fit for our company and employees, and we’ve found that in Cavco. Based on their vision for the industry and business philosophy, I have complete confidence that this is the right move for our dedicated associates, our valued suppliers, and our long-time customers. I offer my full support to ensure a smooth transition and a successful future for Commodore and its employees as part of the Cavco family.”
Highlights of the proposed transaction:
- Financial Impact: Cavco expects this proposed acquisition to be significantly accretive to earnings and cash flow from
operations in fiscal year 2022.
- Capital Allocation: Following this strategic deployment of existing cash, Cavco will still maintain a significant cash position available for other investments.
- Geographic Footprint: The addition of Commodore will expand Cavco’s geographic reach into the Northeast United States, while enhancing its presence in the Midwest and Mid-Atlantic markets.
- Leadership: Commodore brings a strategic and innovative management team with a great cultural fit with Cavco’s values and local management philosophy. Their continued leadership will play a critical role in the Company’s long-term success.
- Potential for operational and revenue synergies: Best practice implementation will create significant manufacturing cost and efficiency improvements across the combined company. In addition to approaches Cavco can bring to the Commodore operations, Commodore has developed and implemented advanced manufacturing technologies that will lead to
significant improvements to the Cavco operations. Additionally, the combined network of plants will create distribution improvement opportunities.
The transaction is expected to close in the Company’s third quarter of fiscal year 2022, subject to applicable regulatory approvals and satisfaction of certain customary conditions. TN Capital Advisors LLC (“True North”) acted as exclusive financial advisor to Cavco for the transaction. Whelan Advisory and Lincoln International acted as advisors to The Commodore Corporation. Polsinelli served as legal advisor to Cavco. Williams Parker served as legal advisor to The Commodore Corporation.