Pulte Homes and Centex to Merge

Pulte Homes, Inc. (NYSE: PHM) and Centex Corporation (NYSE: CTX) announced today that their respective boards of directors have unanimously approved a definitive merger agreement under which Pulte and Centex will combine in a stock-for-stock transaction valued at $3.1 billion, including $1.8 billion of net debt.

In calendar year 2008, Pulte and Centex delivered more than 39,000 closings with combined pro forma revenues of $11.6 billion. The combined company will have the strongest liquidity position among its peer group with more than $3.4 billion of cash as of March 31, 2009. Pulte and Centex ended March with approximately $1.7 billion of cash each.

Under the terms of the agreement, Centex shareholders will receive 0.975 shares of Pulte common stock for each share of Centex they own. Based on the closing price of Pulte stock on April 7, 2009, the transaction has a value of $10.50 per Centex share, representing a premium of 32.6% to the 20-day volume weighted average trading price of Centex’s shares. The combined company currently would have an equity market capitalization of $4.1 billion and an enterprise value of $7.2 billion. Upon closing of the transaction, Pulte shareholders will own approximately 68% of the combined company, and Centex shareholders will own approximately 32%.

“Combining these two industry leaders with proud legacies into one company puts us in an excellent position to navigate through the current housing downturn, poised to accelerate our return to profitability,” said Pulte President and Chief Executive Officer Richard J. Dugas, Jr. “Centex’s significant presence in the entry level and move-up categories is complemented by Pulte’s strength in both the move-up and active adult segments, the latter through our popular Del Webb brand. Together we will have considerable presence in more than 59 markets across America. In addition, both organizations share an unwavering focus on delivering unparalleled customer satisfaction, maximizing the influence of strong brands and setting new standards of achievement in operational efficiency.

“The combination will also allow us to capitalize on the opportunities presented by the addition of Centex’s land positions to Pulte’s, including Centex’s sizable holdings in both Texas and the Carolinas, two areas that continue to exhibit strength in the face of today’s difficult housing market.”

Centex Chairman and Chief Executive Officer Timothy Eller said, “Today represents a significant milestone in this industry’s history as two leading companies join forces. We share common cultures and rich traditions of delivering quality and value, doing the right thing and exceeding the expectations of our customers. We’re proud to begin writing this next chapter together.

“We are always looking for the best way to deliver more value to all our stakeholders and drive the company forward. We have had a high regard for the Pulte management team and their performance during this downturn, and I strongly believed that our organizations would complement each other’s strengths. My conversations with Richard reinforced that conviction.

“We believe this is the right combination at the right time in the business cycle. By acting decisively now, we’re creating unrivaled firepower to capitalize on the opportunities in homebuilding that are now becoming visible on the horizon. We will have a deeper and more expanded presence that we are confident will allow us to begin realizing the benefits of our combined scale immediately. Moreover, our shareholders will receive an immediate premium for their shares as well as participate in the upside potential of the combined company.”

Complementary Portfolio of Brands

The combination of Pulte and Centex will offer exceptional homes in well-designed communities that meet the desires of a cross-section of customers, ranging from first-time buyers to Baby Boomers. Fox & Jacobs Homes, Centex Homes, Pulte Homes, DiVosta Homes and Del Webb are all top brands known by entry level, first move-up, second move-up and active adult purchasers throughout the nation. This powerful brand lineup is consistent with Pulte’s vision of creating the industry’s best and most-recognized brands, and leveraging their presence across America. The combined organization will expand its geographic footprint to cover 59 markets, 29 states and the District of Columbia.

The two companies are the industry’s recognized leaders in customer satisfaction. They are the only homebuilders to have received the Platinum Award from J.D. Power & Associates for excellence in customer satisfaction.

Efficiencies and Cost Savings

Pulte expects that efficiency gains and other savings from this transaction should generate cost reductions of approximately $350 million annually, consisting of approximately $250 million in overhead savings and $100 million in debt expense relief, resulting from the expected retirement of debt maturities in excess of $1 billion prior to year-end 2009. The company expects to realize a significant portion of the estimated cost savings during the first full year of operations after the transaction is completed, with the full amount realized by the third year. Pulte also expects to realize additional savings opportunities through production efficiencies and purchasing synergies.

The companies have confidence in the ability to achieve the estimated efficiencies and cost savings based on Pulte’s successful track record of integration, including its acquisition of Del Webb in 2001. That acquisition, the largest of its kind at the time, helped make Pulte the number-one builder of active adult communities in America, the fastest-growing segment of home buying.

Management, Board and Headquarters

Upon completion of the transaction, Mr. Dugas will assume the positions of chairman, president and chief executive officer of Pulte, Inc. Mr. Eller will join the board of directors of Pulte as vice chairman and will serve as a consultant to the company for two years following the close of the transaction. The board of directors of Pulte will be expanded and will include four current members from the Centex board, including Mr. Eller, and eight members of the current Pulte board, including company founder and current Pulte Chairman William J. Pulte.

To guide and ensure a successful transition, a transition executive committee will be formed and will be headed by Mr. Dugas and Mr. Eller.

The combined company will use the Pulte name and will be headquartered in Bloomfield Hills. The company plans to maintain a significant presence in Dallas.