The deal was a tremendous vote of confidence for Standard Pacific, and it could not have come at a better time than now as the real estate market takes a hit. The transaction was also this week’s deal of the week for three reasons:
First, the total investment amount was three times Standard Pacific’s market cap at the time of the deal announcement. Yeah, that’s just plain silly. Things soon evened out a bit as Standard Pacific’s stock rose nearly 70% on its first day of post-announcement trading.
Second, U.S. homebuilding is just a perfect place for a turnaround firm like MatlinPatterson to play. Demand is low, materials costs are high. The sector might not yet be at its cyclical nadir yet, but it’s clearly on that end of the curve.
Finally, it was a short week, which meant slim pickings. —Dan Primack