Phoenix-based Cavco Industries Inc. is set to acquire rival American Homestar Corp. in a $190 million deal aimed at bolstering the product mix and market share of the maker of manufactured and modular homes.
The planned acquisition, announced this month, is expected to close before the end of the year.
Cavco has over 7,000 employees, operates 31 production plants and 80 retail centers across the United States. The company has built manufactured home communities in 21 states, according to its website.
The deal would bring American Homestar's two factories in the Dallas area and 19 retail locations and 800 employees into the fold at Cavco. American Homestar is known in the industry for manufacturing Oak Creek Homes.
Strategic add amid growing demand for modular housing
"Some deals that we've done over time have been because we wanted to get access to a new geography. This deal is the other kind," Cavco President and CEO Bill Boor said in an interview with Homes.com. "This is one where we already have a pretty good position in Texas, but how their manufacturing plants complement ours is kind of rounding out our product mix.
"When we looked at the four plants that we have in Texas, and we looked at their two plants, and then we looked at what the combined retail distribution would look like, because they're bringing 19 retail stores, we felt like this gets us deeper in a market we think is really important."
Boor said talks to bring American Homestar under the Cavco umbrella go back to late 2023. He added that the company will make determinations on branding and other issues as the deal closes.
"Founded by my father, Buck Teeter, in 1971, American Homestar focused on providing high-quality, affordable housing while also fostering a stable and rewarding work environment for its employees," said American Homestar's President and CEO Dwayne Teeter in a statement. "As we enter this exciting new alliance with Cavco, we know this combination is a perfect cultural fit and that our people will be part of a dynamic, growing company, well-positioned to compete in an ever-changing environment."
Amid a shortage of affordable homes for younger buyers, many cities are encouraging modular housing construction. The University of California, Berkeley’s Terner Center found that factory-built homes could reduce construction time by up to 50%, though challenges to this approach include the upfront investment required in factories and building codes that may discourage housing that isn’t built on-site.
The share of first-time homebuyers in the overall buying pool dropped to an all-time low of 24% between 2023 and 2024, according to the National Association of Realtors.