"This combination is a perfect fit with our strategy of having a dominant position in a handful of select markets," according to Kevork S. Hovnanian, chairman and founder of the company. Besides its long-time dominance of the New Jersey market, where it has built one of every 10 homes that have gone up in the last 30 years, Hovnanian is now the largest builder in North Carolina and the second largest in metro Washington, DC. It also has a major presence in such national markets as Dallas, Southern California, Nashville, and certain Gulf Coast markets.

"The merger achieves our objective of providing greater liquidity for our shareholders," comments Geaton A. DeCesaris Jr., president/CEO of Washington Homes. In the wake of the merger, he is now president of homebuilding operations and COO for Hovnanian Enterprises.

Total equity value of the merger consideration was $94.8 million, paid 40% in cash and the balance in Hovnanian class A common shares. Total value, including assumption of debt, is estimated to be in the $137 million range. The revamped organization is said to control more than 40,000 development, with almost three-quarters of them under rolling option contracts.

The acquisition may end, for the near term, Hovnanian's buying spree. The latest deal was the company's fifth in four years, the others involving PC Homes and Domain Builders in Northern Virginia, Matzel & Mumford of Hazlet, NJ and Goodman Builders in Dallas. "Wall Street likes larger companies," says Kevork Hovnanian. "There's a premium assigned to large companies in all categories."

Now, however, "it may be time for us to digest what we have and get operating efficiencies we want to obtain," Hovnanian continues. He wouldn't completely rule out additional acquisitions in the months ahead, but considers it "unlikely."

For the time being, "we have a joint team [from Hovnanian and Washington] that is developing an integration plan to build on the market strength we've gained and to find additional synergies," he concludes.

For earlier story about merger announcement, click on:NJ's Top Homebuilder Just Got Bigger