Residential construction company Great Southern Homes announced today that it has entered into a definitive merger agreement with DiamondHead Holdings. If approved, upon closing GSH will become a publicly traded company renamed United Homes Group. The new company would list on the Nasdaq under new ticker symbol UHG.
The transaction values the combined company at a pro forma enterprise value of approximately $572 million, as of Dec. 31.
As part of the transaction, existing GSH shareholders will roll 100% of their equity into shares of the combined company and, assuming no redemptions from DHHC public shareholders, will hold approximately 51% of the combined company at closing.
Assuming no redemptions, the transaction will deliver approximately $320 million in cash proceeds, net of transaction costs, as well as a $25 million commitment to purchase and not redeem DHHC public shares from the DHHC sponsor group, including David Hamamoto and Antara Capital.
The transaction includes an earn-out provision pursuant to which GSH stockholders are entitled to receive up to an aggregate maximum of 20 million additional shares, over a five year period, as and when the share price of the combined company reaches certain thresholds. In addition, approximately 2.1 million shares owned by the sponsor currently will be subject to the earn-out. The transaction also provides that additional sponsor shares will become subject to the earn-out to the extent there is not $100 million of common stock at closing (including shares of common stock not redeemed, newly issued common stock and common stock subject to any convertible securities issued by DHHC prior to the closing). Read more.
