Berkshire pays a 24% premium for a homebuilder — ride the M&A ripple across homebuilder stocks
Warren Buffett's Berkshire Hathaway just announced it's buying homebuilder Taylor Morrison for $6.8 billion in cash, paying $72.50 per share — a 24% premium above where the stock last closed. This is Berkshire's first major deal under its new CEO, Greg Abel.
Idea
When a company like Berkshire Hathaway — known for disciplined, patient dealmaking — pays a 24% premium for a homebuilder, it tells the market that homebuilder stocks are cheaper than their real value. Taylor Morrison shares should trade toward the $72.50 offer price as the deal progresses, creating a low-risk gap to capture. Beyond that, other homebuilders like D.R. Horton and Lennar could get bid up by investors who now see the entire sector as takeover targets. This is a classic case where one big deal shines a spotlight on an overlooked group of stocks.