NEW YORK (TheStreet) -- Ryland Group (RYL) shares closed trading up 5.21% to $45.02 in intraday trading on Monday after the company announced that it was merging with fellow Southern California home builder Standard Pacific (SPF).
The merger would create a company with a market cap of $5.2 billion, ranking it as the fourth largest home builder in the country.
As part of the terms of the deal, Standard Pacific will execute a 1-for-5 reverse stock split and then issue 1.091 common shares for each share Ryland stockholders own.
Standard Pacific shareholders would own about 59% of the new company following the merger.
Ryland CEO Larry Nicholson will run the newly formed company with Standard Pacific CEO Scott Stowell taking over as chairman of the board.
Standard Pacific shares closed trading up 5.62% to $8.83 today.
TheStreet Ratings team rates RYLAND GROUP INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate RYLAND GROUP INC (RYL) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, reasonable valuation levels, growth in earnings per share and increase in net income. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."