Cavco Industries to Aquire The Commodore Corporation for $153 Million

CLARION CO., Pa. (EYT) – Cavco Industries, Inc. announced today that it has signed a binding offer to acquire the business and certain assets and liabilities of The Commodore Corporation, including its six manufacturing facilities and two wholly-owned retail locations.

(Photos by Dave Cyphert of ProPoint Media Photography)

Commodore is the largest independent builder of manufactured and modular housing in the United States, operating under a variety of brand names such as Commodore Homes of Pennsylvania, Commodore Homes of Indiana, Colony Homes, MidCountry Homes, Pennwest Homes, and R-Anell Homes.

Commodore has over 1,200 employees and operates across the Northeast, Midwest and Mid-Atlantic regions, with wholly owned retail stores in Indiana and New York.

The Colony Factory Crafted Homes division in Shippenville, Pennsylvania, serves a 14-state area in the Northeastern United States. Colony Homes builds both manufactured homes and modular homes.

Commodore Homes of Pennsylvania in Shippenville is well known throughout the industry for high quality, innovative designs, and beautiful homes made possible by a highly-trained stable workforce, many with decades of experience. Commodore Homes of Pennsylvania build both manufactured homes and modular homes.

Mannorwood Homes, located in Emlenton, are homes that come standard Energy Star Ready and Green Ready to help reduce energy bills, offer lower maintenance, provide healthier indoor air quality and improve the environment. Manorwood Homes builds both modular homes and light commercial buildings.

Pennwest Homes, also located in Emlenton, is an innovative system-built home builder that specializes in a wide selection of single family homes, constructed to the state building code in a buyer’s area. Pennwest offers ranch, Cape Cod, and two story style homes. Pennwest Homes builds modular homes exclusively.

Commodore Homes of Indiana, located in Goshen, Indiana, is a major producer of system-built, high-performance homes in the Midwest United States. Well known for innovative designs, superior construction, and outstanding service and support, Commodore Homes of Indiana also specializes in custom floor plans. Commodore Homes of Indiana builds both modular homes and higher-quality manufactured homes.

In March 2014, R-Anell, located in Crouse, North Carolina, became part of The Commodore Corporation, combining the quality and reputation of R-Anell Homes, the financial strength of Commodore, and the excellent builder network.

Commodore’s newest facility, MidCountry Homes, is located in Dorchester, Wisconsin. Built by Wisconsin Craftsman, MidCountry Homes offer standard features going beyond industry standards and are built to exceed code.

In addition to manufacturing, Commodore also participates in commercial lending operations with its dealers that Cavco will also acquire and continue the existing programs. For the last 12 months ended March 31, 2021, Commodore generated net sales of approximately $258 million and sold over 6,600 modules, equating to over 3,700 homes.

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The purchase price totals $153 million, before certain adjustments that will be determined upon close of the transaction. The estimated cash outlay is $140 million after adjustments and including transaction fees. Cavco expects to fund the acquisition entirely with cash on hand.

“During the acquisition process, we have developed a tremendous respect for what has been accomplished at Commodore under Barry Shein’s leadership,” Bill Boor, Cavco President and Chief Executive Officer, said. “Their reputation for quality, design, customer relationships, and integrity is very consistent with Cavco’s philosophy and approach to doing business. We are extremely excited to work with the Commodore leadership and employees as we leverage best practices and technologies across the combined manufacturing network. Commodore’s market presence is a strategic extension of our current footprint, providing a platform for additional growth in the Northeast.”

“What was most important to me and the other members of Commodore’s leadership was to find the best fit for our company and employees, and we’ve found that in Cavco,” Barry Shein, President and Chief Executive Officer of Commodore, commented.

“Based on their vision for the industry and business philosophy, I have complete confidence that this is the right move for our dedicated associates, our valued suppliers, and our long-time customers. I offer my full support to ensure a smooth transition and a successful future for Commodore and its employees as part of the Cavco family.”

Highlights of the proposed transaction:

  • Financial Impact: Cavco expects this proposed acquisition to be significantly accretive to earnings and cash flow from operations in fiscal year 2022.
  • Capital Allocation: Following this strategic deployment of existing cash, Cavco will still maintain a significant cash position available for other investments.
  • Geographic Footprint: The addition of Commodore will expand Cavco’s geographic reach into the Northeast United States, while enhancing its presence in the Midwest and Mid-Atlantic markets.
  • Leadership: Commodore brings a strategic and innovative management team with a great cultural fit with Cavco’s values and local management philosophy. Their continued leadership will play a critical role in the company’s long-term success.
  • Potential for operational and revenue synergies: Best practice implementation will create significant manufacturing cost and efficiency improvements across the combined company. In addition to approaches Cavco can bring to the Commodore operations, Commodore has developed and implemented advanced manufacturing technologies that will lead to significant improvements to the Cavco operations. Additionally, the combined network of plants will create distribution improvement opportunities.

The transaction is expected to close in the company’s third quarter of fiscal year 2022, subject to applicable regulatory approvals and satisfaction of certain customary conditions. TN Capital Advisors LLC (“True North”) acted as exclusive financial advisor to Cavco for the transaction. Whelan Advisory and Lincoln International acted as advisors to The Commodore Corporation. Polsinelli served as legal advisor to Cavco. Williams Parker served as legal advisor to The Commodore Corporation.

The Commodore Corporation and its different divisions have a lengthy history dating back to 1952. They are the largest independent manufactured and modular homebuilder in the United States.

Cavco Industries, Inc., headquartered in Phoenix, Arizona, designs and produces factory-built housing products primarily distributed through a network of independent and company-owned retailers. The company is one of the largest producers of manufactured homes in the United States, based on reported wholesale shipments, marketed under a variety of brand names including Cavco, Fleetwood, Palm Harbor, Fairmont, Friendship, Chariot Eagle and Destiny. The company is also a leading producer of park model RVs, vacation cabins and systems-built commercial structures, as well as modular homes built primarily under the Nationwide Homes brand.

Cavco’s management will hold a conference call and webcast to discuss the transaction today, July 26, 2021, at 1:00 p.m.

A live webcast of the conference call will be available at https://investor.cavco.com or via telephone at + 1 (844) 348-1686 (domestic) or + 1 (213) 358-0891 (international). An archive of the webcast and presentation will be available for 60 days at https://investor.cavco.com.


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