Shares of Florida homebuilder WCI Communities shed 12.8% in regular trading and another 9.4% in AH trading to close at $8.94 Thursday after the company announced it has not found a buyer. WCI, which put itself up for sale in February, had rejected as insufficient an offer from activist investor Carl Icahn to buy the company for $22 per share. Icahn, whose offer expired in May, planned to oust WCI's management and install a new board of directors. The company's efforts to solicit a superior bid have been fruitless. "[D]eteriorating conditions and uncertainty in the homebuilding and debt markets have made the sale process more challenging," the company said in a release. The tightening credit markets will make it "difficult for the company to sell large amounts of land in the near term and/or recapitalize," wrote Bank of America Corp. debt analyst Andrew Brausa, who downgraded WCI's notes to Neutral from Buy. WCI builds homes in planned communities in Florida, where mortgage loan payments that are one to three months past due increased 30% in Q1 2007 from Q4 2006. "That $22 per share bid looks awfully good now," said Morningstar analyst Eric Landry. "There is a glut of condos that has gotten worse, and investors are more focused on it."
Sources: Press release, Bloomberg, Reuters, Forbes, MarketWatch
Commentary: WCI Communities' Board of Directors Rejects Icahn's Offer • Icahn, WCI Management Trade Barbs at Hint of Hostile Bid; Shares Jump • Contrarian Investors Seek Value in Housing
Stocks/ETFs to watch: WCI. Competitors: LEN, PHM, TOL. ETFs: EES
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