Berkshire scoops up Taylor Morrison at a fat premium — play the deal spread and homebuilder sympathy
Berkshire Hathaway just agreed to buy home builder Taylor Morrison for $72.50 per share in cash — about 24% above where the stock closed on Friday. It's the first big deal under Berkshire's new CEO Greg Abel.
Idea
When a cash buyout is announced at a premium, the target stock usually jumps but often stays slightly below the offer price because investors price in the risk that the deal could fall apart. With Berkshire Hathaway — one of the most cash-rich, reliable buyers in the market — behind this deal, that completion risk is lower than usual. That gap between today's price and the $72.50 offer is essentially a waiting-game profit if the deal closes. There's also a psychological lift for the entire home-builder sector, which could make other builders attractive as potential takeover candidates.