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UCP Inc. (UCP) Skyrockets Amid Merger to Fetch $1.3B in Combined Value

A few minutes before closing bell, UCP Inc. (NYSE:UCP) on April 11 skyrocketed by nearly 21% in heavy trading to $11.25, after disclosing its merger with Century Communities Inc. (NYSE:CCS) to build a combined enterprise value of over $1.3 billion. Shares of Century rose 1.72% in heavy trading to $26.55.

Upon the close of the $336 million transaction, the combined companies expect to see an equity market cap of over $700 million, UCP said in a press release. The deal value includes the payment of certain indebtedness, company said in a news release.

To execute the deal, each outstanding share of UCP Inc. (NYSE:UCP) common stock will be converted into the right to receive $5.32 in cash and 0.2309 of a newly issued share of Century Communities Inc. (NYSE:CCS) common stock. Based on the closing sale price of Century’s common stock as reported yesterday on the NYSE, the implied value of the total stock and cash consideration to be received by UCP’s stockholders in the merger is $11.35 per share, and UCP’s stockholders would own, on a pro forma basis, approximately 16.4% of the combined company.

The merger will realize combined reach in 10 states and inventories of more than $1.2 billion, according to UCP. It is expected to close by the end of the third quarter of 2017.

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Paul Hakimata Photography/<Shutterstock.com

What Does The Smart Money Sentiment Say?

Out of the 742 funds we track at Insider Monkey, 4 funds hold positions on UCP Inc. (NYSE:UCP) shares, valued at $16 million in the fourth quarter of 2016, compared to 5 funds with shares valued at $14 million in the third quarter of the same year. The position remained the same for David Keldan of Buckingham Capital Management, quarter over quarter. Currently, Keldan holds 965,535 shares of UCP, valued at $11.6 million.

Meanwhile, we saw 14 funds holding shares of Century Communities Inc. (NYSE:CCS) valued at $72 million in the fourth quarter, versus only 13 funds whose shares value at $77 million in the previous quarter. Howard Marks of Oaktree Capital Management kept its position on Century Communities, quarter over quarter. Marks currently holds 1.47 million shares of the company valued at $30.85 million.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 39.7% gains over the past 12 months and outperformed the 24.1% gain enjoyed by the S&P 500 ETFs. Our enhanced small-cap hedge fund strategy returned more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points over the last 4.5 years (see details here).

The Bottom Line

UCP Inc. (NYSE:UCP) and Century Communities Inc. (NYSE:CCS) saw their shares climb today following a deal that would fetch the companies a combined enterprise value of $1.3 billion. For some light reading, here are 6 most expensive billionaire homes in the world.

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