November 2nd 2024.
Sekisui House, a renowned homebuilding company from Japan, caused quite a stir at the beginning of this year with their announcement to acquire M.D.C. Holdings. One of the main questions on everyone's mind was how long the two founders of the Denver-based homebuilder, Larry Mizel and David Mandarich, would stay on board after the acquisition.
Well, the wait is over. Mizel and Mandarich have officially announced that they will be leaving the company they have successfully led for five decades on December 31. The acquisition process was completed on April 19, a relatively fast turnaround for the largest homebuilder acquisition in the United States since 2017.
Mizel and Mandarich expressed their appreciation for the professionalism and respect shown by the Sekisui House team throughout the acquisition process and the initial months of integration. They also stated their belief that their employees and customers are in good hands as part of the Sekisui House family. As they bid farewell, the pair reflected on their 50-year journey with the company, highlighting their pride in constructing over 250,000 homes and the amazing team they have built.
With Japan facing a decline in population, Sekisui House began its journey to acquire U.S. homebuilders in 2017 with Woodside Homes Co. They continued this trend with the addition of Holt Homes in 2021, Chesmar Homes in 2022, and Hubble Homes in 2023. The acquisition of M.D.C. was a significant step forward for Sekisui, as the company currently builds around 10,000 homes per year, making it the 11th largest builder in the country. With their U.S. subsidiary aiming for 15,000 home closings next fiscal year, they are set to claim the fifth spot.
The CEO of Sekisu House subsidiary SH Residential Holdings, Toru Tsuji, expressed his gratitude for Mizel and Mandarich's guidance during the acquisition and their contributions to the company. He also praised them for their leadership and careers in the industry. Mizel founded Mizel Development Corp. in 1972 and brought Mandarich on board in 1977 to oversee operations. Their tenure is unmatched among Colorado's top public company executives, and their resilience has been tested through multiple real estate cycles.
Sekisu House, based in Osaka, was established in 1960 and has directly delivered over 2.6 million homes, including those built by their acquired subsidiaries. They are known for their cutting-edge construction technology and energy-efficient designs. Mizel, a prominent figure in Denver's philanthropy scene, has played a significant role in establishing several Jewish institutions, such as the Simon Weisenthal Center in Los Angeles, the Museum of Tolerance Jerusalem, and the Mizel Museum and Counterterrorism Education Learning Lab in Denver.
According to a proxy filing with the U.S. Securities and Exchange Commission, Mizel's 13.4% holdings in M.D.C. shares were valued at an estimated $642 million, while Mandarich's 8.17% ownership stake was worth $391.1 million, based on the purchase price of $63 a share. Additionally, the executive team at M.D.C. received "golden parachutes" in the form of cash and accelerated equity payouts tied to the takeover. Mizel's parachute included $54.9 million in cash and $29.2 million in accelerated equity awards, while Mandarich's was worth $67.6 million.
In April, Sekisui also signed employment agreements with Mizel and Mandarich, which included a payment of $11 million and $10 million, respectively, upon their departure. Furthermore, Sekisui House pledged to donate $22.19 million to the MDC/Richmond American Homes Foundation on the closing date, representing five years' worth of annual donations.
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