S-4/A
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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 20, 2019

 

 

 

REGISTRATION NO. 333-235410

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

AMENDMENT NO. 1

TO

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

Taylor Morrison Home Corporation

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   1531   83-2026677
(State or other jurisdiction of
incorporation or organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification No.)

4900 N. Scottsdale Road, Suite 2000

Scottsdale, AZ 85251

(480) 840-8100

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

 

Darrell C. Sherman, Esq.

Benjamin A. Aronovitch, Esq.

4900 N. Scottsdale Road, Suite 2000

Scottsdale, AZ 85251

(480) 840-8100

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

Copies to:

 

Scott A. Barshay, Esq.

John C. Kennedy, Esq.

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, NY 10019-6064

(212) 373-3000

 

Michael A. Treska, Esq.

Paul D. Tosetti, Esq.

Latham & Watkins LLP

650 Town Center Drive, 20th Floor

Costa Mesa, CA 92626-1925

(714) 540-1235

 

 

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after the effectiveness of this registration statement and the satisfaction or waiver of all other conditions under the merger agreement described herein.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer      Smaller reporting company  
     Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  ☐

 

 

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


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The information in this joint proxy statement/prospectus is not complete and may be changed. We may not sell the securities offered by this joint proxy statement/prospectus until the registration statement filed with the Securities and Exchange Commission is effective. This joint proxy statement/prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction where an offer, solicitation or sale is not permitted.

 

PRELIMINARY-SUBJECT TO COMPLETION-DATED DECEMBER 20, 2019

 

LOGO

  LOGO

MERGER PROPOSED-YOUR VOTE IS VERY IMPORTANT

On November 5, 2019, Taylor Morrison Home Corporation (“Taylor Morrison”) entered into an Agreement and Plan of Merger (the “merger agreement”) with Tower Merger Sub, Inc., a wholly owned subsidiary of Taylor Morrison (“Merger Sub”), and William Lyon Homes, pursuant to which, subject to the terms and conditions of the merger agreement, Merger Sub will be merged with and into William Lyon Homes, with William Lyon Homes continuing as the surviving corporation and a wholly owned, direct subsidiary of Taylor Morrison (the “merger”).

Subject to the terms and conditions of the merger agreement, at the effective time of the merger (the “effective time”), each share of Class A common stock, par value $0.01 per share, of William Lyon Homes (“William Lyon Homes Class A common stock”) and Class B common stock, par value $0.01 per share, of William Lyon Homes (“William Lyon Homes Class B common stock,” and together with William Lyon Homes Class A common stock, “William Lyon Homes common stock”) issued and outstanding immediately prior to the effective time (subject to limited exceptions, including shares as to which appraisal rights have been properly exercised and not lost, forfeited or validly withdrawn in accordance with Delaware law) shall be converted automatically into (1) 0.8000 (the “exchange ratio”) of a fully paid and nonassessable share of common stock, par value $0.00001 per share, of Taylor Morrison (“Taylor Morrison common stock”), and (2) the right to receive $2.50 in cash, without interest (the “Cash Consideration”), plus cash in lieu of any fractional shares of Taylor Morrison common stock that otherwise would have been issued. Taylor Morrison stockholders will continue to own their existing shares of Taylor Morrison common stock. Immediately following the effective time, it is expected that, based on the number of shares of Taylor Morrison common stock and William Lyon Homes common stock issued and outstanding on November 5, 2019, the last full trading day before the public announcement of the merger, existing holders of Taylor Morrison common stock will own approximately 77% of the outstanding shares of Taylor Morrison common stock and existing holders of William Lyon Homes common stock will own approximately 23% of the outstanding shares of Taylor Morrison common stock.

The value of the merger consideration to be received by William Lyon Homes stockholders in exchange for each share of William Lyon Homes common stock will fluctuate with the market value of Taylor Morrison common stock until the merger is completed. Based on the closing price of Taylor Morrison common stock on the New York Stock Exchange (the “NYSE”) on November 5, 2019, the last full trading day before the public announcement of the merger, the exchange ratio represented approximately $18.95 in value for each share of William Lyon Homes common stock, and when combined with the Cash Consideration, represented total consideration of $21.45 for each share of William Lyon Homes common stock. Based on the closing price of Taylor Morrison common stock on the NYSE on December 5, 2019, the most recent practicable date for which such information was available, the exchange ratio represented approximately $18.62 in value for each share of William Lyon Homes common stock, and when combined with the Cash Consideration, represented total consideration of $21.12 for each share of William Lyon Homes common stock. Taylor Morrison common stock is currently traded on the NYSE under the symbol “TMHC”, and William Lyon Homes Class A common stock is currently traded on the NYSE under the symbol “WLH”. We urge you to obtain current market quotations of Taylor Morrison common stock and William Lyon Homes Class A common stock.

Taylor Morrison and William Lyon Homes will each hold special meetings of their respective stockholders in connection with the proposed merger. Information about the special meetings, the merger, the merger agreement and other business to be considered by Taylor Morrison and William Lyon Homes stockholders at their respective special meetings is contained in this joint proxy statement/prospectus.

At the special meeting of Taylor Morrison stockholders (the “Taylor Morrison special meeting”), Taylor Morrison stockholders will be asked to vote on (i) a proposal to approve the issuance of shares (the “Share Issuance”) of Taylor Morrison common stock to William Lyon Homes stockholders in connection with the merger (the “Share Issuance Proposal”) and (ii) a proposal to adjourn the Taylor Morrison special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the Share Issuance Proposal (the “Taylor Morrison Adjournment Proposal”).

The board of directors of Taylor Morrison (the “Taylor Morrison Board”) has fixed the close of business on December 23, 2019 as the record date (the “Taylor Morrison Record Date”) for the Taylor Morrison special meeting. Only holders of record of Taylor Morrison common stock as of the Taylor Morrison Record Date shall be entitled to notice of, and to vote at, the Taylor Morrison special meeting or any adjournment or postponement thereof.

Approval of the Share Issuance Proposal requires the affirmative vote of a majority in voting power of shares of Taylor Morrison common stock present in person or represented by proxy and entitled to vote thereon, assuming a quorum is present. Approval of the Taylor Morrison Adjournment Proposal requires the affirmative vote of a majority in voting power of shares of Taylor Morrison common stock present in person or represented by proxy and entitled to vote thereon.

At the special meeting of William Lyon Homes stockholders (the “William Lyon Homes special meeting”), William Lyon Homes stockholders will be asked to vote on (i) a proposal to adopt the merger agreement (the “Merger Proposal”), (ii) a proposal to approve, on an advisory, non-binding basis, the compensation that may be paid or become payable to William Lyon Homes’ named executive officers in connection with the merger (the “Advisory Compensation Proposal”) and (iii) a proposal to adjourn the William Lyon Homes special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the Merger Proposal (the “William Lyon Homes Adjournment Proposal”).

The board of directors of William Lyon Homes (the “William Lyon Board”) has fixed the close of business on December 23, 2019 as the record date (the “William Lyon Homes Record Date”) for the William Lyon Homes special meeting. Only holders of record of shares of William Lyon Homes common stock as of the William Lyon Homes Record Date shall be entitled to notice of, and to vote at, the William Lyon Homes special meeting or any adjournment or postponement thereof.

Approval of the Merger Proposal requires the affirmative vote of holders of a majority of the voting power of the outstanding shares of William Lyon Homes common stock entitled to vote thereon. Approval of the Advisory Compensation Proposal, which is an advisory, non-binding vote, requires the affirmative vote of the holders of a majority of the voting power of the shares of William Lyon Homes common stock cast at a meeting where a quorum is present. Approval of the William Lyon Homes Adjournment Proposal requires the affirmative vote of holders of a majority of the voting power of the shares of William Lyon Homes common stock cast at a meeting where a quorum is present.

We cannot complete the merger unless the stockholders of Taylor Morrison approve the Share Issuance Proposal and stockholders of William Lyon Homes approve the Merger Proposal. Your vote is very important, regardless of the number of shares you own. Whether or not you expect to attend either special meeting in person, please submit a proxy to vote your shares as promptly as possible so that your shares may be represented and voted at the Taylor Morrison or William Lyon Homes special meeting, as applicable.

The Taylor Morrison Board has unanimously determined that the merger agreement and the transactions contemplated by the merger agreement, including the merger and the Share Issuance, are advisable, fair to, and in the best interests of Taylor Morrison and its stockholders, approved, adopted and declared advisable the merger agreement and the transactions contemplated by the merger agreement, including the merger and the Share Issuance, and resolved to recommend that the holders of Taylor Morrison common stock approve the Share Issuance. The Taylor Morrison Board recommends that Taylor Morrison stockholders vote FOR the Share Issuance Proposal and FOR the Taylor Morrison Adjournment Proposal.

The William Lyon Homes Board has unanimously determined that the merger agreement and the transactions contemplated by the merger agreement, including the merger, are advisable and in the best interests of William Lyon Homes and its stockholders, approved the merger agreement and the transactions contemplated by the merger agreement and resolved to recommend that the holders of William Lyon Homes common stock adopt the merger agreement. The William Lyon Homes Board recommends that William Lyon Homes stockholders vote FOR the Merger Proposal, FOR the Advisory Compensation Proposal and FOR the William Lyon Homes Adjournment Proposal.

The obligations of Taylor Morrison and William Lyon Homes to complete the merger are subject to the satisfaction or waiver of several conditions set forth in the merger agreement. The accompanying joint proxy statement/prospectus contains detailed information about Taylor Morrison, William Lyon Homes, the special meetings, the merger agreement and the merger. You should read this joint proxy statement/prospectus carefully and in its entirety before voting, including the section entitled Risk Factors beginning on page 25 of this joint proxy statement/prospectus.

We look forward to the successful combination of Taylor Morrison and William Lyon Homes.

Sincerely,

 

Sheryl D. Palmer
President, Chief Executive Officer &
Chairman of the Board of Directors
Taylor Morrison Home Corporation
  Matthew R. Zaist
President & Chief Executive Officer
William Lyon Homes

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the merger or the other transactions described in this joint proxy statement/prospectus or the securities to be issued in connection with the merger, or determined if this joint proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

This joint proxy statement/prospectus is dated                    ,             and is first being mailed to Taylor Morrison and William Lyon Homes stockholders on or about                    ,             .


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LOGO

Taylor Morrison Home Corporation

4900 N. Scottsdale Road, Suite 2000

Scottsdale, Arizona 85251

(480) 840-8100

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON JANUARY 30, 2020

Dear Stockholders of Taylor Morrison Home Corporation:

We are pleased to invite you to attend the special meeting of stockholders of Taylor Morrison Home Corporation (“Taylor Morrison”) to be held on January 30, 2020 at 10:00 a.m., local time, at 4900 N. Scottsdale Road, 6th Floor, Scottsdale, AZ 85251, for the following purposes:

 

   

to consider and vote on a proposal to approve the issuance of shares of Taylor Morrison common stock, par value $0.00001 per share (“Taylor Morrison common stock”), in connection with the merger contemplated by the Agreement and Plan of Merger, dated November 5, 2019 (a copy of which is attached as Annex A to the accompanying joint proxy statement/prospectus), by and among Taylor Morrison, Tower Merger Sub, Inc. and William Lyon Homes (the “Share Issuance” and, such proposal, the “Share Issuance Proposal”); and

 

   

to consider and vote on a proposal to adjourn the Taylor Morrison special meeting to another time or place, if necessary or appropriate, as determined by Taylor Morrison, to solicit additional proxies if there are insufficient votes at the time of the Taylor Morrison special meeting or any adjournments thereof to approve the Share Issuance Proposal (the “Taylor Morrison Adjournment Proposal”).

Taylor Morrison will transact no other business at the Taylor Morrison special meeting except such business as may properly be brought before the Taylor Morrison special meeting or any adjournment or postponement thereof. Please refer to the accompanying joint proxy statement/prospectus for further information with respect to the business to be transacted at the Taylor Morrison special meeting.

The board of directors of Taylor Morrison (the “Taylor Morrison Board”) has fixed the close of business on December 23, 2019 as the record date (the “Taylor Morrison Record Date”) for the Taylor Morrison special meeting. Only holders of record of Taylor Morrison common stock as of the Taylor Morrison Record Date are entitled to notice of, and to vote at, the Taylor Morrison special meeting or any adjournment or postponement thereof. Completion of the merger is conditioned on, among other things, approval of the Share Issuance Proposal by the Taylor Morrison stockholders.

Approval of the Share Issuance Proposal requires the affirmative vote of a majority in voting power of shares of stock present in person or represented by proxy and entitled to vote thereon, assuming a quorum is present. Approval of the Taylor Morrison Adjournment Proposal requires the affirmative vote of a majority in voting power of shares of stock present in person or represented by proxy and entitled to vote thereon.

The Taylor Morrison Board recommends that Taylor Morrison stockholders vote “FOR” the Share Issuance Proposal and “FOR” the Taylor Morrison Adjournment Proposal.

Your vote is very important. Whether or not you plan to attend the Taylor Morrison special meeting, please act promptly to submit a proxy to vote your shares with respect to the proposals described above. You may submit a proxy to vote your shares by completing, signing and dating the enclosed proxy card and returning it in the postage-paid envelope provided. You also may submit a proxy to vote your shares by telephone or through the Internet by following the instructions set forth on the proxy card. If you


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attend the Taylor Morrison special meeting, you may vote your shares in person, even if you have previously submitted a proxy in writing, by telephone or through the Internet. If your shares are held in the name of a nominee or intermediary, please follow the instructions on the voting instruction card furnished by such record holder.

We urge you to read the accompanying joint proxy statement/prospectus, including all documents incorporated by reference into the accompanying joint proxy statement/prospectus, and its annexes carefully and in their entirety. In particular, seeRisk Factors” beginning on page 25 of the accompanying joint proxy statement/prospectus. If you have any questions concerning the Share Issuance Proposal, the merger or the other transactions contemplated thereby, the Taylor Morrison special meeting or the accompanying joint proxy statement/prospectus, would like additional copies of the accompanying joint proxy statement/prospectus, or need help submitting a proxy to have your shares of Taylor Morrison common stock voted, please contact Taylor Morrison’s proxy solicitor:

Innisfree M&A Incorporated

501 Madison Ave, 20th Floor

New York, New York 10022

Stockholders may call toll-free: (877) 456-3507

Banks and Brokers may call collect: (212) 750-5833

By Order of the Board of Directors,

Darrell C. Sherman

Executive Vice President, Chief Legal Officer and Secretary

                    ,             


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LOGO

William Lyon Homes

4695 MacArthur Court, 8th Floor

Newport Beach, California 92660

(949) 833-3600

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON JANUARY 30, 2020

Dear Stockholders of William Lyon Homes:

We are pleased to invite you to attend the special meeting of stockholders (the “William Lyon Homes special meeting”) of William Lyon Homes, a Delaware corporation, which will be held at the Renaissance Newport Beach Hotel, 4500 MacArthur Boulevard, Newport Beach, California 92660 on January 30, 2020 at 9:00 a.m., local time, to consider and vote on the following proposals:

 

   

a proposal to approve the adoption of the Agreement and Plan of Merger, dated as of November 5, 2019 (the “merger agreement”), among Taylor Morrison, Tower Merger Sub, Inc., a wholly owned subsidiary of Taylor Morrison (“Merger Sub”), and William Lyon Homes, pursuant to which Merger Sub will be merged with and into William Lyon Homes, with William Lyon Homes continuing as the surviving corporation and a wholly owned, direct subsidiary of Taylor Morrison (the “merger”), a copy of which is attached as Annex A to the joint proxy statement/prospectus accompanying this notice (the “Merger Proposal”);

 

   

a proposal to approve, on an advisory, non-binding basis, the compensation that may be paid or become payable to William Lyon Homes’ named executive officers in connection with the merger (the “Advisory Compensation Proposal”); and

 

   

a proposal to adjourn the William Lyon Homes special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve the Merger Proposal (the “William Lyon Homes Adjournment Proposal”).

William Lyon Homes will transact no other business at the William Lyon Homes special meeting except such business as may properly be brought before the William Lyon Homes special meeting or any adjournment or postponement thereof. Please refer to the attached joint proxy statement/prospectus for further information with respect to the business to be transacted at the William Lyon Homes special meeting.

The William Lyon Homes board of directors (the “William Lyon Homes Board”) has fixed the close of business on December 23, 2019 as the record date for determination of William Lyon Homes stockholders entitled to receive notice of, and to vote at, the William Lyon Homes special meeting or any adjournments or postponements thereof. Only holders of record of shares of Class A common stock, par value $0.01 per share, of William Lyon Homes (the “William Lyon Homes Class A common stock”) and Class B common stock, par value $0.01 per share, of William Lyon Homes (the “William Lyon Homes Class B common stock,” and together with the William Lyon Homes Class A common stock, the “William Lyon Homes common stock”) at the close of business on the record date are entitled to vote at the William Lyon Homes special meeting and any adjournment or postponement of the William Lyon Homes special meeting.

The William Lyon Homes Board has unanimously determined that the merger agreement and the transactions contemplated by the merger agreement, including the merger, are advisable and in the best interests of William Lyon Homes and its stockholders, approved the merger agreement and the transactions contemplated by the merger agreement and resolved to recommend that the holders of William Lyon Homes common stock adopt the merger agreement.


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The William Lyon Homes Board recommends that William Lyon Homes stockholders vote “FOR” the Merger Proposal, “FOR” the Advisory Compensation Proposal and “FOR” the William Lyon Homes Adjournment Proposal.

Approval of the Merger Proposal requires the affirmative vote of holders of a majority of the voting power of the outstanding shares of William Lyon Homes common stock entitled to vote thereon. Approval of the Advisory Compensation Proposal, which is an advisory, non-binding vote, requires the affirmative vote of the holders of a majority of the voting power of the shares of William Lyon Homes common stock cast at a meeting where a quorum is present. Approval of the William Lyon Homes Adjournment Proposal requires the affirmative vote of holders of a majority of the voting power of the shares of William Lyon Homes common stock cast at a meeting where a quorum is present.

Your vote is very important. Whether or not you plan to attend the William Lyon Homes special meeting, please act promptly to submit a proxy to vote your shares of William Lyon Homes common stock with respect to the proposals described above. You may submit a proxy to vote your shares of William Lyon Homes common stock by completing, signing and dating the enclosed proxy card and returning it in the postage-paid envelope provided. You also may submit a proxy to vote your shares of William Lyon homes common stock by telephone or through the Internet by following the instructions set forth on the proxy card. If you attend the William Lyon Homes special meeting, you may vote your shares of William Lyon Homes common stock in person, even if you have previously submitted a proxy in writing, by telephone or through the Internet. If your shares of William Lyon homes common stock are held in the name of a nominee or intermediary, please follow the instructions on the voting instruction card furnished by such record holder.

We urge you to read the accompanying joint proxy statement/prospectus, including all documents incorporated by reference into the accompanying joint proxy statement/prospectus, and its annexes carefully and in their entirety. In particular, seeRisk Factors” beginning on page 25 of the accompanying joint proxy statement/prospectus. If you have any questions concerning the merger agreement, the merger or the other transactions contemplated thereby, the William Lyon Homes special meeting or the accompanying joint proxy statement/prospectus, would like additional copies of the accompanying joint proxy statement/prospectus, or need help submitting a proxy to have your shares of William Lyon Homes common stock voted, please contact William Lyon Homes’ proxy solicitor:

D.F. King & Co., Inc.

48 Wall Street, 22nd Floor

New York, New York 10005

Stockholders may call toll free: (800) 334-0384

Banks and Brokers may call collect: (212) 269-5550

Email: WLH@dfking.com

By Order of the Board of Directors,

Jason R. Liljestrom

Senior Vice President, General Counsel and Corporate Secretary


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ADDITIONAL INFORMATION

This joint proxy statement/prospectus incorporates important business and financial information about Taylor Morrison and William Lyon Homes from other documents that are not included in or delivered with this joint proxy statement/prospectus. This information is available to you without charge upon your request. You can obtain the documents incorporated by reference into this joint proxy statement/prospectus free of charge by requesting them in writing or by telephone from the appropriate company at the following addresses and telephone numbers:

 

Innisfree M&A Incorporated

501 Madison Ave, 20th Floor

New York, NY 10022

Stockholders may call toll-free: (877) 456-3507

Banks and Brokers may call collect: (212) 750-5833

 

D.F. King & Co., Inc.

48 Wall Street, 22nd Floor

New York, New York 10005

Stockholders may call toll free: (800) 334-0384

Banks and Brokers may call collect: (212) 269-5550

Email: WLH@dfking.com

or   or

Taylor Morrison Home Corporation

4900 N. Scottsdale Road, Suite 2000

Scottsdale, AZ 85251

(480) 840-8100

Attn: Investor Relations

 

William Lyon Homes

4695 MacArthur Court, 8th Floor

Newport Beach, CA 92660

(949) 833-3600

Attn: Investor Relations

Investors may also consult Taylor Morrison’s or William Lyon Homes’ website for more information concerning the merger described in this joint proxy statement/prospectus. Taylor Morrison’s website is https://www.taylormorrison.com. William Lyon Homes’ website is http://www.lyonhomes.com. Information included on these websites is not incorporated by reference into this joint proxy statement/prospectus.

To receive timely delivery of the documents in advance of the special meetings, you should make your request no later than January 23, 2020, which is five business days before the special meetings.

For a more detailed description of the information incorporated by reference in this joint proxy statement/prospectus and how you may obtain it, see the section entitled “Where You Can Find More Information” beginning on page 178 of this joint proxy statement/prospectus.


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ABOUT THIS JOINT PROXY STATEMENT/PROSPECTUS

This joint proxy statement/prospectus, which forms part of a registration statement on Form S-4 filed with the U.S. Securities and Exchange Commission (the “SEC”) by Taylor Morrison, constitutes a prospectus of Taylor Morrison under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), with respect to the shares of Taylor Morrison common stock to be issued to William Lyon Homes stockholders pursuant to the merger. This joint proxy statement/prospectus also constitutes a joint proxy statement for both Taylor Morrison and William Lyon Homes under Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

You should rely only on the information contained in or incorporated by reference into this joint proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this joint proxy statement/prospectus. This joint proxy statement/prospectus is dated                ,                 . You should not assume that the information contained in this joint proxy statement/prospectus is accurate as of any date other than that date. You should not assume that the information incorporated by reference into this joint proxy statement/prospectus is accurate as of any date other than the date of the incorporated document. Neither our mailing of this joint proxy statement/prospectus to Taylor Morrison stockholders or William Lyon Homes stockholders nor the issuance by Taylor Morrison of shares of Taylor Morrison common stock pursuant to the merger will create any implication to the contrary.

This joint proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation. Information contained in this joint proxy statement/prospectus regarding Taylor Morrison has been provided by Taylor Morrison and information contained in this joint proxy statement/prospectus regarding William Lyon Homes has been provided by William Lyon Homes.

Unless otherwise indicated or as the context otherwise indicates, when used in this joint proxy statement/prospectus:

 

   

“combined company” refers to Taylor Morrison, following completion of the merger;

 

   

“closing date” refers to date on which the merger is completed;

 

   

“DGCL” refers to the General Corporation Law of the State of Delaware;

 

   

“DOJ” refers to the Antitrust Division of the U.S. Department of Justice;

 

   

“effective time” refers to the effective time of the merger;

 

   

“Exchange Act” refers to the Securities Exchange Act of 1934, as amended;

 

   

“Exchange Agent” refers to Computershare Trust Company, N.A.;

 

   

“FTC” refers to the U.S. Federal Trade Commission;

 

   

“GAAP” refers to U.S. Generally Accepted Accounting Principles;

 

   

“HSR Act” refers to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended;

 

   

“Latham & Watkins” refers to Latham & Watkins, LLP;

 

   

“merger” means, as contemplated by the merger agreement, the merger of Merger Sub with and into William Lyon Homes, with William Lyon Homes as the Surviving Corporation in such merger (the “first merger”); the result of which is the legacy business and subsidiaries of William Lyon Homes becoming indirect subsidiaries of Taylor Morrison. Under certain circumstances, an alternative structure may be utilized in which, immediately following the first merger, William Lyon Homes would be merged as part of one integrated transaction into a limited liability company wholly-owned by Taylor Morrison that is classified as a disregarded entity for U.S. federal income tax purposes (the “second merger”). If the second merger occurs, then the first merger and the second merger, taken together, are referred to herein as the “merger.” If the second merger does not occur, the first merger is referred to herein as the “merger”;


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“merger agreement” refers to the Agreement and Plan of Merger, dated as of November 5, 2019, by and among Taylor Morrison, Merger Sub and William Lyon Homes, a copy of which is attached as Annex A to this joint proxy statement/prospectus;

 

   

“Merger Sub” refers to Tower Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Taylor Morrison;

 

   

“Paul, Weiss” refers to Paul, Weiss, Rifkind, Wharton & Garrison LLP;

 

   

“NYSE” refers to the New York Stock Exchange;

 

   

“SEC” refers to the Securities and Exchange Commission;

 

   

“Securities Act” refers to the Securities Act of 1933, as amended;

 

   

“special meetings” means the Taylor Morrison special meeting and the William Lyon Homes special meeting;

 

   

“Taylor Morrison” refers to Taylor Morrison Home Corporation, a Delaware corporation;

 

   

“Taylor Morrison Board” refers to the board of directors of Taylor Morrison;

 

   

“Taylor Morrison common stock” refers to the common stock of Taylor Morrison, par value $0.00001 per share;

 

   

“Taylor Morrison special meeting” refers to the special meeting of Taylor Morrison stockholders that will be conducted to vote on certain matters in connection with the merger as described in this joint proxy statement/prospectus;

 

   

“voting agreement” refers to the Voting Agreement, dated as of November 5, 2019, by and among Taylor Morrison and the Lyon Stockholders (as defined below), a copy of which is attached as Annex B to this joint proxy statement/prospectus;

 

   

“we” and “our” refer to Taylor Morrison and William Lyon Homes collectively;

 

   

“William Lyon Homes” refers to William Lyon Homes, a Delaware corporation;

 

   

“William Lyon Homes Board” refers to the board of directors of William Lyon Homes;

 

   

“William Lyon Homes Class A common stock” refers to the Class A common stock of William Lyon Homes, par value $0.01 per share;

 

   

“William Lyon Homes Class B common stock” refers to the Class B common stock of William Lyon Homes, par value $0.01 per share;

 

   

“William Lyon Homes common stock” refers to William Lyon Homes Class A common stock and William Lyon Homes Class B common stock collectively;

 

   

“William Lyon Homes equity plan” refers to the William Lyon Homes Amended and Restated 2012 Equity Incentive Plan and the William Lyon Homes 2012 Equity Incentive Plan, in each case, as amended, supplemented or modified from time to time.

 

   

“William Lyon Homes special meeting” refers to the special meeting of William Lyon Homes stockholders that will be conducted to vote on certain matters in connection with the merger as described in this joint proxy statement/prospectus;

 

   

“William Lyon Homes 2022 Senior Notes” means William Lyon Homes, Inc.’s 7.00% Senior Notes due 2022 issued pursuant to the William Lyon Homes 2022 Senior Notes Indenture;

 

   

“William Lyon Homes 2022 Senior Notes Indenture” means that certain Indenture, dated as of August 11, 2014, among WLH PNW Finance Corp., the guarantors from time to time party thereto and U.S. Bank National Association, as trustee, as have been and as may be further amended, supplemented or otherwise modified from time to time;

 

   

“William Lyon Homes 2023 Senior Notes” means William Lyon Homes, Inc.’s 6.00% Senior Notes due 2023 issued pursuant to the William Lyon Homes 2023 Senior Notes Indenture;


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“William Lyon Homes 2023 Senior Notes Indenture” means that certain Indenture, dated as of March 9, 2018, among William Lyon Homes, Inc., the guarantors from time to time party thereto and U.S. Bank National Association, as trustee, as have been and as may be further amended, supplemented or otherwise modified from time to time;

 

   

“William Lyon Homes 2025 Senior Notes” means William Lyon Homes, Inc.’s 5.875% Senior Notes due 2025 issued pursuant to the William Lyon Homes 2025 Senior Notes Indenture;

 

   

“William Lyon Homes 2025 Senior Notes Indenture” means that certain Indenture, dated as of January 31, 2017, among William Lyon Homes, Inc., the guarantors from time to time party thereto and U.S. Bank National Association, as trustee, as have been and as may be further amended, supplemented or otherwise modified from time to time;

 

   

“William Lyon Homes 2027 Senior Notes” means William Lyon Homes, Inc.’s 6.625% Senior Notes due 2027 issued pursuant to the William Lyon Homes 2027 Senior Notes Indenture;

 

   

“William Lyon Homes 2027 Senior Notes Indenture” means that certain Indenture, dated as of July 9, 2019, among William Lyon Homes, Inc., the guarantors from time to time party thereto and U.S. Bank National Association, as trustee, as have been and as may be further amended, supplemented or otherwise modified from time to time;

 

   

“William Lyon Homes Senior Notes” means, collectively, the William Lyon Homes 2022 Senior Notes, the William Lyon Homes 2023 Senior Notes, the William Lyon Homes 2025 Senior Notes and the William Lyon Homes 2027 Senior Notes; and

 

   

“William Lyon Homes Senior Notes Indentures” means, collectively, the William Lyon Homes 2022 Senior Notes Indenture, the William Lyon Homes 2023 Senior Notes Indenture, the William Lyon Homes 2025 Senior Notes Indenture and the William Lyon Homes 2027 Senior Notes Indenture.


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TABLE OF CONTENTS

 

     Page  

QUESTIONS AND ANSWERS

     vii  

SUMMARY

     1  

The Companies

     1  

Taylor Morrison Special Meeting

     2  

The William Lyon Homes Special Meeting

     4  

Summary Historical Consolidated Financial Data

     18  

Selected Unaudited Pro Forma Condensed Combined Financial Information of Taylor Morrison and William Lyon Homes

     22  

Unaudited Comparative Per Share Data

     24  

RISK FACTORS

     25  

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     36  

THE COMPANIES

     38  

THE TAYLOR MORRISON SPECIAL MEETING

     40  

TAYLOR MORRISON PROPOSALS

     46  

THE WILLIAM LYON HOMES SPECIAL MEETING

     47  

WILLIAM LYON HOMES PROPOSALS

     54  

THE MERGER

     56  

General

     56  

Background of the Merger

     56  

Taylor Morrison’s Reasons for the Merger; Recommendations of the Taylor Morrison Board

     69  

William Lyon Homes’ Reasons for the Merger; Recommendations of the William Lyon Homes Board

     72  

Opinion of Taylor Morrison’s Financial Advisor, Citi

     78  

Opinion of William Lyon Homes’ Financial Advisor, J.P. Morgan

     87  

Certain Unaudited Projected Financial Information

     95  

Interests of Certain William Lyon Homes Directors and Officers in the Merger

     100  

Interests of Certain Taylor Morrison Directors and Officers in the Merger

     107  

Board of Directors and Management Following the Merger

     107  

Accounting Treatment

     108  

Regulatory Approvals Required to Complete the Merger

     108  

Litigation Relating to the Merger

     108  

Exchange of Shares in the Merger

     108  

Treatment of William Lyon Homes’ Existing Indebtedness

     109  

Dividends and Share Repurchases

     110  

Listing of Shares of Taylor Morrison Common Stock and Delisting and Deregistration of William Lyon Homes Class A Common Stock

     110  

Appraisal Rights

     110  

Corporate Headquarters

     110  

THE MERGER AGREEMENT

     111  

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

     136  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

     140  

COMPARATIVE STOCK PRICE DATA AND DIVIDENDS

     153  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND EXECUTIVE OFFICERS OF TAYLOR MORRISON

     154  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND EXECUTIVE OFFICERS OF WILLIAM LYON HOMES

     156  

COMPARISON OF RIGHTS OF TAYLOR MORRISON STOCKHOLDERS AND WILLIAM LYON HOMES STOCKHOLDERS

     160  

APPRAISAL RIGHTS

     167  

LEGAL MATTERS

     173  

 

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     Page  

EXPERTS

     174  

STOCKHOLDER PROPOSALS

     175  

HOUSEHOLDING OF JOINT PROXY STATEMENT/PROSPECTUS

     177  

WHERE YOU CAN FIND MORE INFORMATION

     178  

Annex A—Agreement and Plan of Merger, dated as of November 5, 2019

Annex B—Voting Agreement, dated as of November 5, 2019

Annex C—Opinion of Citigroup Global Markets, Inc.

Annex D—Opinion of J.P. Morgan Securities LLC

Annex E—Section 262 of the Delaware General Corporation Law

 

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QUESTIONS AND ANSWERS

The following questions and answers are intended to address some commonly asked questions regarding the merger, the merger agreement, certain voting procedures and other matters with respect to the William Lyon Homes special meeting or the Taylor Morrison special meeting. These questions and answers may not address all questions that may be important to William Lyon Homes stockholders or Taylor Morrison stockholders. To better understand these matters, and for a more complete description of the terms of the merger agreement, the voting agreement, the merger and the other transactions contemplated thereby including, certain risks relating to the merger and Taylor Morrison following the merger, and the proceedings to be conducted at the William Lyon Homes special meeting and the Taylor Morrison special meeting, you should carefully read this entire joint proxy statement/prospectus, including each of the attached Annexes, as well as the documents that have been incorporated by reference into this joint proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page 178 of this joint proxy statement/prospectus.

 

Q:

Why am I receiving this joint proxy statement/prospectus?

 

A:

On November 5, 2019, Taylor Morrison, Merger Sub, and William Lyon Homes entered into the merger agreement that is described in this joint proxy statement/prospectus. A copy of the merger agreement is attached as Annex A to this joint proxy statement/prospectus and is incorporated by reference herein. In order to complete the merger, among other things, William Lyon Homes stockholders must affirmatively vote to adopt the merger agreement and Taylor Morrison stockholders must affirmatively vote to approve the issuance of shares of Taylor Morrison common stock to William Lyon Homes stockholders as consideration for the merger.

This joint proxy statement/prospectus serves as the proxy statement through which Taylor Morrison and William Lyon Homes will solicit proxies to obtain the necessary stockholder approvals for the proposed merger. It also serves as the prospectus by which Taylor Morrison will issue shares of its common stock as the Merger Consideration (as defined below).

William Lyon Homes will hold a special meeting of stockholders to obtain the requisite approval of its stockholders in favor of (i) a proposal to adopt the merger agreement (the “Merger Proposal”), (ii) a proposal to approve, on an advisory, non-binding basis, the compensation that may be paid or become payable to William Lyon Homes’ named executive officers in connection with the merger (the “Advisory Compensation Proposal”) and (iii) a proposal to adjourn the William Lyon Homes special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the Merger Proposal (the “William Lyon Homes Adjournment Proposal”).

Taylor Morrison will hold a special meeting of stockholders to obtain the requisite approval of its stockholders in favor of (i) a proposal to approve the issuance of shares (the “Share Issuance”) of Taylor Morrison common stock to William Lyon Homes stockholders in connection with the merger (the “Share Issuance Proposal”) and (ii) a proposal to adjourn the Taylor Morrison special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the Share Issuance Proposal (the “Taylor Morrison Adjournment Proposal”).

Your vote is very important. We encourage you to complete, sign, date and submit a proxy card to have your shares voted as soon as possible.

 

Q:

What will happen in the merger, if completed?

 

A:

In the merger, Merger Sub will be merged with and into William Lyon Homes, with William Lyon Homes surviving the merger as a wholly owned, direct subsidiary of Taylor Morrison (the “Surviving Corporation”); the result of which is the legacy business and subsidiaries of William Lyon Homes becoming indirect subsidiaries of Taylor Morrison. Under certain circumstances, an alternative structure may be utilized in which, immediately following the first merger, William Lyon Homes would be merged as part of

 

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  one integrated transaction into a limited liability company wholly owned by Taylor Morrison that is classified as a disregarded entity for U.S. federal income tax purposes. As a result of the merger, Merger Sub’s separate corporate existence will cease, and William Lyon Homes will no longer be a publicly traded company. See the section entitled “The Merger Agreement—Structure and Effect of the Merger” beginning on page 111 of this joint proxy statement/prospectus and the merger agreement attached as Annex A to this joint proxy statement/prospectus for more information about the merger.

 

Q:

What will William Lyon Homes stockholders receive in the merger?

 

A:

At the effective time each share of William Lyon Homes common stock (other than restricted stock, dissenters’ shares or any shares of William Lyon Homes common stock owned directly by William Lyon Homes (or any wholly owned subsidiary of William Lyon Homes), Taylor Morrison or Merger Sub (the “Canceled Shares”)) will be converted into the right to receive consideration consisting of (i) 0.8000 validly issued, fully paid and non-assessable shares of Taylor Morrison common stock (the “Stock Consideration”) and (ii) $2.50 in cash (the “Cash Consideration” and together with the Stock Consideration, the “Merger Consideration”).

You will receive cash in lieu of a fractional share to which you would otherwise be entitled (the “Fractional Shares” and such cash, the “Fractional Share Consideration”), and you will not be entitled to dividends, voting rights or any other rights in respect of such fractional share. For more information regarding the Merger Consideration, see the section entitled “The Merger Agreement—Merger Consideration” beginning on page 112 of this joint proxy statement/prospectus.

Pursuant to the voting agreement, William H. Lyon, Lyon Shareholder 2012, LLC and The William Harwell Lyon Separate Property Trust established July 28, 2000 (collectively, the “Lyon Stockholders”) have each agreed to vote all of their shares of William Lyon Homes common stock (representing approximately     % of the outstanding shares of William Lyon Homes common stock as of the William Lyon Homes Record Date) in favor of the Merger Proposal and any action required in furtherance thereof. If, however, the William Lyon Homes Board changes its recommendation with respect to the Merger Proposal, the Lyon Stockholders will be required to vote shares of William Lyon Homes common stock equal to 30% of the outstanding voting power of William Lyon Homes common stock in favor of the Merger Proposal. The Lyon Stockholders may not transfer their William Lyon Homes common stock prior to the merger other than to an affiliate that agrees to be bound by the voting agreement.

Because the exchange ratio for the shares of Taylor Morrison common stock that will be issued in the merger is fixed and there will be no adjustment to such exchange ratio, the aggregate value of the Merger Consideration received by William Lyon Homes stockholders who receive Taylor Morrison common stock in the merger will depend on the then-current NYSE market price of shares of Taylor Morrison common stock at the effective time of the merger. As a result, the value of the Merger Consideration that William Lyon Homes stockholders will receive in the merger could be greater than, less than, or the same as, the value of such Merger Consideration on the date of this joint proxy statement/prospectus or at the time of the William Lyon Homes special meeting. The closing price of shares of Taylor Morrison common stock on the NYSE on November 4, 2019, the last full trading day before the public announcement of the merger, was $24.13. The closing price of Taylor Morrison common stock on the NYSE on                 ,                 , the latest practicable trading day before the date of this joint proxy statement/prospectus, was $            .

For more information regarding the Merger Consideration to be provided to William Lyon Homes stockholders, see the section entitled “The Merger Agreement—Merger Consideration” beginning on page 112 of this joint proxy statement/prospectus.

 

Q:

What will Taylor Morrison stockholders receive in the merger?

 

A:

If the merger is completed, Taylor Morrison stockholders will not receive any Merger Consideration and will continue to hold their shares of Taylor Morrison common stock.

 

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Q:

What happens if the market price of shares of Taylor Morrison common stock or William Lyon Homes Class A common stock changes before the closing of the Merger?

 

A:

Regardless of the price at which William Lyon Homes Class A common stock or Taylor Morrison common stock is trading at the effective time, no change will be made to the exchange ratio. Because the exchange ratio is fixed, the value of the Stock Consideration to be received in the merger will fluctuate between the date of this joint proxy statement/prospectus and the effective time based upon the market value of Taylor Morrison common stock. However, the value of the Stock Consideration to be received in the merger will not be affected by fluctuations in the market price of William Lyon Homes common stock. For more information regarding the Merger Consideration to be provided to William Lyon Homes stockholders, see the section entitled “The Merger Agreement—Merger Consideration” beginning on page 112 of this joint proxy statement/prospectus.

 

Q:

What happens if the merger is not completed?

 

A:

If the merger is not completed for any reason, William Lyon Homes stockholders will not receive any Merger Consideration for their shares of William Lyon Homes common stock, and William Lyon Homes will remain an independent public company with William Lyon Homes common stock continuing to be traded on the NYSE. For a discussion of the fees payable in the event the merger is not completed, see the section entitled “The Merger Agreement—Fees and Expenses and Termination Fees” beginning on page 130 of this joint proxy statement/prospectus.

 

Q:

When and where will the special meetings be held?

 

A:

William Lyon Homes: The William Lyon Homes special meeting will be held on January 30, 2020, at 9:00 a.m. local time, at the Renaissance Newport Beach Hotel, 4500 MacArthur Boulevard, Newport Beach, California 92660.

Taylor Morrison: The Taylor Morrison special meeting will be held on January 30, 2020, at 10:00 a.m. local time, at 4900 N. Scottsdale Road, 6th Floor, Scottsdale, AZ 85251.

 

Q:

What are stockholders being asked to vote on?

 

A:

William Lyon Homes: William Lyon Homes stockholders are being asked to vote on:

 

   

William Lyon Homes Proposal I: the Merger Proposal;

 

   

William Lyon Homes Proposal II: the Advisory Compensation Proposal; and

 

   

William Lyon Homes Proposal III: the William Lyon Homes Adjournment Proposal.

The approval by William Lyon Homes stockholders of the Merger Proposal is a condition to the obligations of Taylor Morrison and of William Lyon Homes to complete the merger. The approval by William Lyon Homes stockholders of the Advisory Compensation Proposal and the William Lyon Homes Adjournment Proposal are not conditions to the obligations of Taylor Morrison or of William Lyon Homes to complete the merger.

Taylor Morrison: Taylor Morrison stockholders are being asked to vote on:

 

   

Taylor Morrison Proposal I: the Share Issuance Proposal; and

 

   

Taylor Morrison Proposal II: the Taylor Morrison Adjournment Proposal.

The approval by Taylor Morrison stockholders of the Share Issuance Proposal is a condition to the obligations of Taylor Morrison and of William Lyon Homes to complete the merger. The approval by Taylor Morrison stockholders of the Taylor Morrison Adjournment Proposal is not a condition to the obligations of Taylor Morrison or of William Lyon Homes to complete the merger.

 

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Q:

Why are the merger agreement and the merger not being considered and voted upon by Taylor Morrison stockholders?

 

A:

Under Delaware law, Taylor Morrison stockholders are not required to approve the merger or adopt the merger agreement. Taylor Morrison stockholders are being asked to consider and vote on the issuance of Taylor Morrison common stock in connection with the merger.

 

Q:

Who is entitled to vote at the special meetings?

 

A:

William Lyon Homes: William Lyon Homes has two classes of voting stock issued and outstanding, the William Lyon Homes Class A common stock and William Lyon Homes Class B common stock, which vote on all matters presented to William Lyon Homes stockholders for their vote or approval. Only holders of record of William Lyon Homes common stock as of the William Lyon Homes Record Date, the close of business on December 23, 2019 are entitled to vote at the William Lyon Homes special meeting or any adjournment or postponement thereof.

As of the William Lyon Homes Record Date, there were            shares of William Lyon Homes Class A common stock and            shares of William Lyon Homes Class B common stock outstanding. Each outstanding share of William Lyon Homes Class A common stock is entitled to one vote on each matter to be acted upon at the William Lyon Homes special meeting and each outstanding share of William Lyon Homes Class B common stock is entitled to five votes on each matter to be acted upon at the William Lyon Homes special meeting with holders of shares of William Lyon Homes Class A common stock and William Lyon Homes Class B common stock voting together as a single class on all matters submitted to a vote of stockholders at the William Lyon Homes special meeting.

Taylor Morrison: Taylor Morrison has one class of voting stock issued and outstanding, the Taylor Morrison common stock, which votes on all matters presented to Taylor Morrison stockholders for their vote or approval. Only holders of record of Taylor Morrison common stock as of the Taylor Morrison Record Date, the close of business on December 23, 2019 are entitled to vote at the Taylor Morrison special meeting or any adjournment or postponement thereof.

As of the Taylor Morrison Record Date, there were                 shares of Taylor Morrison common stock outstanding. Each outstanding share of Taylor Morrison common stock is entitled to one vote on each matter to be acted upon at the Taylor Morrison special meeting.

 

Q:

How does the William Lyon Homes Board recommend that the William Lyon Homes stockholders vote?

 

A:

At a meeting of the William Lyon Homes Board held on November 5, 2019, at which all of the William Lyon Homes directors were present, the William Lyon Homes Board unanimously determined that the merger agreement and the transactions contemplated by the merger agreement, including the merger, are advisable, fair to, and in the best interests of, William Lyon Homes and its stockholders, and approved, adopted, and declared advisable the merger agreement and the other transactions contemplated by the merger agreement, including the merger.

The William Lyon Homes Board recommends that William Lyon Homes stockholders vote FOR the adoption of the merger agreement and FOR the William Lyon Homes Adjournment Proposal. SeeWilliam Lyon Homes Proposals—Proposal I. Merger Proposal, William Lyon Homes Proposals—Proposal II. Advisory Compensation Proposal and “William Lyon Homes Proposals—Proposal III. William Lyon Homes Adjournment Proposal” beginning on pages 54, 54 and 55, respectively, of this joint proxy statement/prospectus.

 

Q:

How does the Taylor Morrison Board recommend that the Taylor Morrison stockholders vote?

 

A:

At a meeting of the Taylor Morrison Board held on November 5, 2019, at which all of the Taylor Morrison directors were present, the Taylor Morrison Board unanimously determined that the merger agreement and

 

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  the transactions contemplated by the merger agreement, including the merger and the Share Issuance, are advisable, fair to, and in the best interests of, the Taylor Morrison stockholders, and (i) approved, adopted, and declared advisable the merger agreement and the other transactions contemplated by the merger agreement, including the merger and the Share Issuance, (ii) directed that the Share Issuance be submitted to the Taylor Morrison stockholders for approval at the Taylor Morrison special meeting and (iii) resolved to recommend that the Share Issuance be approved by the Taylor Morrison stockholders.

The Taylor Morrison Board recommends that Taylor Morrison stockholders vote FOR the Share Issuance Proposal and FOR the Taylor Morrison Adjournment Proposal. SeeTaylor Morrison Proposals—Proposal I. Share Issuance Proposal and “Taylor Morrison Proposals—Proposal II. Taylor Morrison Adjournment Proposal” beginning on page 46 of this joint proxy statement/prospectus.

 

Q:

What stockholder vote is required for the adoption of the relevant proposals, and what happens if I abstain?

 

A:

William Lyon Homes: The following are the vote requirements:

 

   

The Merger Proposal: The affirmative vote of holders of a majority of the voting power of the outstanding shares of William Lyon Homes common stock entitled to vote thereon is required to adopt the merger agreement. Accordingly, shares deemed not in attendance at the William Lyon Homes special meeting, whether due to a record holder’s failure to submit a proxy to vote his or her shares or vote his or her shares in person or a “street name” holder’s failure to provide any voting instructions to such holder’s nominee or intermediary, as well as abstentions and broker non-votes (if any) will have the same effect as a vote against the adoption of the merger agreement.

 

   

The Advisory Compensation Proposal: The affirmative vote of the holders of a majority of the voting power of the shares of William Lyon Homes common stock cast at a meeting where a quorum is present is required to approve the Advisory Compensation Proposal. Accordingly, if you abstain from voting, or if you fail to vote or fail to instruct your broker or other nominee to vote, it will have no effect on the outcome of the Advisory Compensation Proposal, assuming a quorum is present.

 

   

The William Lyon Homes Adjournment Proposal: The affirmative vote of holders of a majority of the voting power of the shares of William Lyon Homes common stock cast at a meeting where a quorum is present is required to approve the William Lyon Homes Adjournment Proposal. Accordingly, if you abstain from voting, or if you fail to vote or fail to instruct your broker or other nominee to vote, it will have no effect on the outcome of the William Lyon Homes Adjournment Proposal, assuming a quorum is present.

Taylor Morrison: The following are the vote requirements:

 

   

Share Issuance Proposal: The affirmative vote of a majority in voting power of shares of stock present in person or represented by proxy and entitled to vote thereon, at a meeting where a quorum is present, is required to approve the Share Issuance Proposal. Accordingly, abstentions will have the same effect as a vote against the proposal, but shares deemed not in attendance at the meeting, whether due to a record holder’s failure to submit a proxy to vote his or her shares or vote his or her shares in person or a “street name” holder’s failure to provide any voting instructions to such holder’s nominee or intermediary, as well as broker non-votes (if any) will have no effect on the outcome of the Share Issuance Proposal, assuming a quorum is present.

 

   

Adjournment of Taylor Morrison Special Meeting: The affirmative vote of a majority in voting power of shares of stock present in person or represented by proxy and entitled to vote thereon, even if such majority represents less than a quorum, is required to approve the Taylor Morrison Adjournment Proposal. Accordingly, abstentions will have the same effect as a vote against the proposal, but shares deemed not in attendance at the meeting, whether due to a record holder’s failure to submit a proxy to vote his or her shares or vote his or her shares in person or a “street name” holder’s failure to provide any voting instructions to such holder’s nominee or intermediary, and broker non-votes will have no effect on the outcome of the Taylor Morrison Adjournment Proposal, assuming a quorum is present.

 

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Q:

How many votes do I and others have? Are any stockholders already committed to vote in favor of the relevant proposals?

 

A:

William Lyon Homes: Holders of William Lyon Homes Class A common stock are entitled to one vote for each share of William Lyon Homes Class A common stock owned as of the William Lyon Homes Record Date. As of the William Lyon Homes Record Date, there were                 outstanding shares of William Lyon Homes Class A common stock. Holders of William Lyon Homes Class B common stock are entitled to five votes for each share of William Lyon Homes Class B common stock owned as of the William Lyon Homes Record Date. As of the William Lyon Homes Record Date, there were                 outstanding shares of William Lyon Homes Class B common stock, all of which were held by the Lyon Stockholders. At the William Lyon Homes special meeting, holders of William Lyon Homes Class A common stock and William Lyon Homes Class B common stock will vote together as a single class.

In connection with the execution of the merger agreement, the Lyon Stockholders entered into the voting agreement with Taylor Morrison. As of the William Lyon Homes Record Date, the shares of William Lyon Homes common stock held by the Lyon Stockholders subject to the voting agreement represent approximately    % of the aggregate voting power of shares of William Lyon Homes common stock. The Lyon Stockholders have agreed in the voting agreement to, among other things, vote all shares of William Lyon Homes common stock held by them (representing approximately      % of the outstanding shares of William Lyon Homes common stock as of the William Lyon Homes Record Date) (i) in favor of the Merger Proposal, (ii) against approval of any proposal made in opposition to, in competition with, or that would result in a breach of the merger agreement or the merger or any other transactions contemplated by the merger agreement, and (iii) against certain other actions that would reasonably be expected to prevent, interfere with, or impair or delay, the consummation of the merger or any of the other transactions contemplated by the merger agreement in accordance with their terms. If, however, the William Lyon Homes Board changes its recommendation with respect to the Merger Proposal, the Lyon Stockholders will be required to vote shares of William Lyon Homes common stock equal to 30% of the outstanding voting power of William Lyon Homes common stock in favor of the merger. The voting agreement will terminate automatically on the first to occur of (x) certain amendments or waivers of the merger agreement without the Lyon Stockholders’ prior consent, (y) the effective time of the merger and (z) the termination of the merger agreement. SeeThe Voting Agreement” beginning on page 133 of this joint proxy statement/prospectus.

Taylor Morrison: Holders of Taylor Morrison common stock are entitled to one vote for each share of Taylor Morrison common stock owned as of the Taylor Morrison Record Date. As of the Taylor Morrison Record Date, there were                 outstanding shares of Taylor Morrison common stock.

 

Q:

Do directors and officers have interests that may differ from those of other stockholders?

 

A:

William Lyon Homes: Yes. In considering the recommendation of the William Lyon Homes Board that William Lyon Homes stockholders vote FOR the Merger Proposal, William Lyon Homes stockholders should be aware and take into account the fact that certain members of the William Lyon Homes Board and certain executive officers of William Lyon Homes may have interests in the merger that may be different from, or in addition to, their interests as William Lyon Homes stockholders. The William Lyon Homes Board was aware of these interests during its deliberations on the merits of the merger agreement and in making its decision to approve the merger agreement. SeeThe Merger—Interests of Certain William Lyon Homes Directors and Officers in the Merger” beginning on page 100 of this joint proxy statement/prospectus.

Taylor Morrison: Yes. In considering the recommendation of the Taylor Morrison Board that Taylor Morrison stockholders vote FOR the Share Issuance Proposal, Taylor Morrison stockholders should be aware and take into account the fact that certain members of Taylor Morrison’s Board and certain executive officers of Taylor Morrison may have interests in the merger that may be different from, or in addition to, their interests as Taylor Morrison stockholders. Taylor Morrison’s Board was aware of these interests during its deliberations on the merits of the merger and in making its decision to approve the merger

 

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agreement and to recommend to Taylor Morrison stockholders the approval of the Share Issuance Proposal and the Taylor Morrison Adjournment Proposal. SeeThe Merger—Interests of Certain Taylor Morrison Directors and Officers in the Merger.

 

Q:

What constitutes a quorum at the William Lyon Homes special meeting and the Taylor Morrison special meeting?

 

A:

William Lyon Homes: A quorum of outstanding shares of William Lyon Homes common stock is necessary to take action at the William Lyon Homes special meeting. The presence in person or by proxy of the holders of stock having a majority in voting power of all of the shares of William Lyon Homes common stock entitled to vote at the meeting will constitute a quorum at the William Lyon Homes special meeting. The inspector of election appointed for the William Lyon Homes special meeting will determine whether a quorum is present.

Taylor Morrison: A quorum of outstanding shares of Taylor Morrison common stock is necessary to take action at the Taylor Morrison special meeting. The presence in person or by proxy of the holders of stock having a majority of the voting power of Taylor Morrison common stock entitled to vote at the meeting will constitute a quorum at the Taylor Morrison special meeting. The inspector of election appointed for the Taylor Morrison special meeting will determine whether a quorum is present.

 

Q:

Are there any important risks related to the merger or Taylor Morrison’s or William Lyon Homes’ businesses of which I should be aware?

 

A:

Yes, there are important risks related to the merger and each of Taylor Morrison’s and William Lyon Homes’ businesses. Before making any decision on how to vote, Taylor Morrison and William Lyon Homes urge you to read carefully and in its entirety the section entitled “Risk Factors” beginning on page 25 of this joint proxy statement/prospectus. You also should read and carefully consider the risk factors relating to Taylor Morrison and William Lyon Homes contained in the documents that are incorporated by reference into this joint proxy statement/prospectus, including Taylor Morrison’s and William Lyon Homes’ respective Annual Reports on Form 10-K for the fiscal year ended December 31, 2018, as updated from time to time in each company’s subsequent filings with the SEC.

 

Q:

How do I vote?

 

A:

If you are a Taylor Morrison stockholder of record as of the record date for the Taylor Morrison special meeting or a William Lyon Homes stockholder of record as of the record date for the William Lyon Homes special meeting, you may attend the applicable special meeting and vote your shares in person. You also may choose to submit your proxies by any of the following methods:

 

   

By Mail. If you choose to submit your proxy to vote by mail, simply complete the enclosed proxy card, date and sign it, and return it in the postage-paid envelope provided;

 

   

By Telephone. You may submit your proxy to vote your shares by telephone by calling the toll-free number provided on your proxy card any time up to 11:59 p.m. Eastern Time, on January 29, 2020; or

 

   

Through the Internet. You may also submit your proxy to vote through the Internet by signing on to the website identified on your proxy card and following the procedures described in the website any time up to 11:59 p.m. Eastern Time, on January 29 , 2020.

If you are a beneficial owner and hold your shares in street name, or through a nominee or intermediary, such as a bank or broker, you will receive separate instructions from such nominee or intermediary describing how to vote your shares. The availability of telephonic or Internet voting will depend on the intermediary’s voting process. Please check with your nominee or intermediary and follow the voting instructions provided by your nominee or intermediary with these materials.

 

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Q:

What is a “broker non-vote”?

 

A:

If a holder of William Lyon Homes common stock or Taylor Morrison common stock is a beneficial owner of shares held in “street name” by a bank, broker, trust company or other nominee and does not provide the organization that holds its shares with specific voting instructions, then, under applicable rules, the organization that holds its shares may generally vote on “routine” matters but cannot vote on “non-routine” matters. The proposals to be voted on at the William Lyon Homes special meeting and the Taylor Morrison special meeting are “non-routine” matters. If the organization that holds the beneficial owner’s shares does not receive instructions from such William Lyon Homes or Taylor Morrison stockholder on how to vote its shares on any of the proposals to be voted on at the William Lyon Homes special meeting or the Taylor Morrison special meeting, as applicable, that bank, broker, trust company or other nominee will inform the inspector of election at the William Lyon Homes or the Taylor Morrison special meeting, as applicable, that it does not have authority to vote on any proposal at the applicable special meeting with respect to such shares, and, furthermore, such shares will not be deemed to be in attendance at the meeting. However, if the bank, broker, trust company or other nominee receives instructions from such stockholder on how to vote its shares as to only one or two proposals, the shares will be voted as instructed on such proposal(s) but will not be voted on the other, uninstructed proposal(s). This is generally referred to as a “broker non-vote.”

 

Q:

If my shares are held in street name, will my nominee or intermediary automatically vote my shares for me?

 

A:

No. If your shares of William Lyon Homes common stock or Taylor Morrison common stock are held in street name, you must instruct your nominee or intermediary how to vote your shares. Your nominee or intermediary will vote your shares only if you provide instructions on how to vote by properly completing the voting instruction form sent to you by your nominee or intermediary with this joint proxy statement/prospectus.

 

Q:

What will happen if I return my proxy card without indicating how to vote?

 

A:

If you return your signed and dated proxy card without indicating how to vote your shares on any particular proposal, the William Lyon Homes common stock or Taylor Morrison common stock represented by your proxy will be voted in accordance with the recommendation of the William Lyon Homes Board or the Taylor Morrison Board, respectively.

 

Q:

Is my vote important?

 

A:

Yes, your vote is very important. The merger cannot be completed without the approval by the William Lyon Homes stockholders of the Merger Proposal and the approval by the Taylor Morrison stockholders of the Stock Issuance Proposal.

The William Lyon Homes Board recommends that William Lyon Homes stockholders vote “FOR” the Merger Proposal.

The Taylor Morrison Board recommends that Taylor Morrison stockholders vote “FOR” the Stock Issuance Proposal.

 

Q:

Can I revoke my proxy or change my voting instructions?

 

A:

William Lyon Homes: Yes. You may revoke your proxy or change your vote, at any time, before your proxy is voted at the William Lyon Homes special meeting.

If you are a holder of record as of the William Lyon Homes Record Date, you can revoke your proxy or change your vote by:

 

   

sending a written notice stating that you revoke your proxy to the Corporate Secretary of William Lyon Homes, at William Lyon Homes’ offices at 4695 MacArthur Court, 8th Floor, Newport Beach, CA

 

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92660, Attention: Corporate Secretary, that bears a date later than the date of the previously submitted proxy that you want to revoke and is received by William Lyon Homes’ Corporate Secretary prior to the William Lyon Homes special meeting;

 

   

submitting a valid, later-dated proxy via mail, over the telephone or through the Internet; or

 

   

attending the William Lyon Homes special meeting and voting in person, which will automatically cancel any proxy previously given, or revoking your proxy in person, but your attendance alone will not constitute a vote or revoke any proxy previously given.

If you hold your shares in street name, you must contact your nominee or intermediary to change your vote or obtain a legal proxy to vote your shares if you wish to cast your vote in person at the William Lyon Homes special meeting.

Taylor Morrison: Yes. You may revoke your proxy or change your vote, at any time, before your proxy is voted at the Taylor Morrison special meeting.

If you are a holder of record as of the Taylor Morrison Record Date, you can revoke your proxy or change your vote by:

 

   

sending a written notice stating that you revoke your proxy to the Corporate Secretary of Taylor Morrison, at Taylor Morrison’s offices at 4900 N. Scottsdale Road, Suite 2000, Scottsdale, AZ 85251, Attention: Corporate Secretary, that bears a date later than the date of the previously submitted proxy that you want to revoke and is received by Taylor Morrison’s Corporate Secretary prior to the Taylor Morrison special meeting;

 

   

submitting a valid, later-dated proxy via mail, over the telephone or through the Internet; or

 

   

attending the Taylor Morrison special meeting and voting in person, which will automatically cancel any proxy previously given, or revoking your proxy in person, but your attendance alone will not constitute a vote or revoke any proxy previously given.

If you hold your shares in street name, you must contact your nominee or intermediary to change your vote or obtain a legal proxy to vote your shares if you wish to cast your vote in person at the Taylor Morrison special meeting.

 

Q:

What happens if I transfer my shares of (i) William Lyon Homes common stock before the William Lyon Homes special meeting or (ii) Taylor Morrison common stock before the Taylor Morrison special meeting?

 

A:

William Lyon Homes: The William Lyon Homes Record Date is earlier than the date of the William Lyon Homes special meeting and the date that the merger is expected to be completed. If you transfer your shares of William Lyon Homes common stock after the William Lyon Homes Record Date, but before the William Lyon Homes special meeting, you will retain your right to vote at the William Lyon Homes special meeting. However, you will have transferred the right to receive the Merger Consideration in the merger. In order to receive the Merger Consideration, you must hold your shares of William Lyon Homes common stock through the effective time of the merger.

Taylor Morrison: The Taylor Morrison Record Date is earlier than the date of the Taylor Morrison special meeting and the date that the merger is expected to be completed. If you transfer your shares of Taylor Morrison common stock after the Taylor Morrison Record Date, but before the Taylor Morrison special meeting, you will retain your right to vote at the Taylor Morrison special meeting.

 

Q:

What do I do if I receive more than one set of voting materials?

 

A:

You may receive more than one set of voting materials, including multiple copies of this joint proxy statement/prospectus, the proxy card or the voting instruction form. This can occur if you hold your shares

 

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  in more than one brokerage account, if you hold shares directly as a holder of record and also in street name, or otherwise through another holder of record, and in certain other circumstances. If you receive more than one set of voting materials, please vote or return each set separately in order to ensure that all of your shares are voted.

 

Q:

What will happen if all of the proposals to be considered at the special meetings are not approved?

 

A:

As a condition to completion of the merger, William Lyon Homes stockholders must approve the Merger Proposal at the William Lyon Homes special meeting and Taylor Morrison stockholders must approve the Share Issuance Proposal at the Taylor Morrison special meeting. Completion of the merger is not conditioned or dependent upon the approval of the Advisory Compensation Proposal, William Lyon Homes Adjournment Proposal or the Taylor Morrison Adjournment Proposal.

 

Q:

Are William Lyon Homes stockholders entitled to appraisal rights if they do not vote “FOR” the Merger Proposal?

 

A:

Yes. Under Delaware law, record holders of William Lyon Homes common stock who neither vote in favor of the adoption of the merger agreement nor consent thereto in writing, who continuously hold their shares of William Lyon Homes common stock through the effective date of the merger and who otherwise comply with the procedures set forth in Section 262 of the DGCL, will be entitled to appraisal rights in connection with the merger, and if the merger is completed, subject to the provisions of Section 262 of the DGCL, obtain payment in cash of the fair value of their shares of William Lyon Homes common stock as determined by the Delaware Court of Chancery, together with interest, if any, to be paid on the amount determined to be the fair value, instead of receiving the Merger Consideration for their shares. Under Section 262 of the DGCL, assuming William Lyon Homes Class A common stock remains listed on a national securities exchange immediately prior to the effective time of the merger, the Delaware Court of Chancery will dismiss any appraisal proceedings as to all holders of such shares who have perfected their appraisal rights unless (i) the total number of such shares entitled to appraisal exceeds 1% of the outstanding shares of William Lyon Homes Class A common stock, or (ii) the value of the consideration provided in the merger for such total number of shares entitled to appraisal exceeds $1 million. Under Section 262 of the DGCL, no similar condition to the availability of appraisal rights applies to the William Lyon Homes Class B common stock because it is not expected to be listed on a national securities exchange immediately prior to the effective time of the merger. However, pursuant to the voting agreement, the sole holder of all outstanding shares of William Lyon Homes Class B common stock has agreed not to exercise its appraisal rights. To exercise appraisal rights, William Lyon Homes stockholders must comply with the procedures prescribed by Section 262 of the DGCL. These procedures are summarized under “Appraisal Rights” beginning on page 167 of this joint proxy statement/prospectus. In addition, a copy of the full text of Section 262 of the DGCL is included as Annex E to this joint proxy statement/prospectus. Failure to comply with these provisions may result in a loss of the right of appraisal.

 

Q:

Are Taylor Morrison stockholders entitled to appraisal rights if they do not vote “FOR” the Share Issuance Proposal?

 

A:

Holders of Taylor Morrison common stock will not be entitled to rights of appraisal in connection with the merger.

 

Q:

What are the material U.S. federal income tax consequences of the merger to U.S. holders of William Lyon Homes common stock?

 

A:

Taylor Morrison and William Lyon Homes intend that, for U.S. federal income tax purposes, the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). The merger for this purpose includes the first merger and the second

 

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  merger, if it occurs, as part of one integrated plan of reorganization for U.S. federal income tax purposes. It is a condition to William Lyon Homes’ obligation to consummate the merger that William Lyon Homes receive an opinion from Latham & Watkins LLP (or, if Latham & Watkins LLP is unable to deliver such opinion, from Paul, Weiss, Rifkind, Wharton & Garrison LLP), dated as of the closing date, to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. On the basis of such opinion and except with respect to the receipt of cash in lieu of fractional shares of Taylor Morrison common stock, a U.S. Holder (as defined on page 137) of William Lyon Homes common stock generally will not recognize any loss for U.S. federal income tax purposes upon receipt of the Merger Consideration but may recognize gain to the extent of the Cash Consideration received. Such U.S. Holders may also recognize gain or loss for U.S. federal income tax purposes with respect to any cash received in lieu of fractional shares of Taylor Morrison common stock.

Please review the information in the section entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 136 of this joint proxy statement/prospectus for a more complete description of the material U.S. federal income tax consequences of the merger to U.S. Holders of William Lyon Homes common stock. The tax consequences to you of the merger will depend on your particular facts and circumstances. Please consult your tax advisors as to the specific tax consequences to you of the merger.

 

Q:

What are the conditions to the completion of the merger?

 

A:

Completion of the merger is subject to certain closing conditions, including, but not limited to, the (i) approval of the Merger Proposal by William Lyon Homes stockholders; (ii) approval of the Share Issuance Proposal by Taylor Morrison stockholders; (iii) effectiveness of the registration statement under the Securities Act of which this joint proxy statement/prospectus is a part; and (iv) satisfaction (or to the extent permitted by applicable law, waiver) of other customary conditions to closing. SeeThe Merger Agreement—Conditions to Completion of the Merger” beginning on page 127 of this joint proxy statement/prospectus for more information.

 

Q:

When is the merger expected to be completed?

 

A:

As of the date of this joint proxy statement/prospectus, it is not possible to accurately estimate the closing date of the merger because the merger is subject to the satisfaction (or, to the extent permitted by applicable law, waiver) of the conditions to Taylor Morrison’s and William Lyon Homes’ obligations to complete the merger, some of which are not within the control of such parties; however, Taylor Morrison and William Lyon Homes currently expect the merger to close late in the first quarter or early in the second quarter of 2020. Accordingly, no assurance can be given as to when, or if, the merger will be completed.

 

Q:

Do I need to do anything at this time with my shares of (i) William Lyon Homes common stock other than voting on the proposals at the William Lyon Homes special meeting or (ii) Taylor Morrison common stock other than voting on the proposals at the Taylor Morrison special meeting?

 

A:

William Lyon Homes: If you are a William Lyon Homes stockholder, you will be entitled to receive the Merger Consideration for your shares after the effective time of the merger unless you properly exercise and do not subsequently lose, forfeit or validly withdraw your appraisal rights in respect of such shares as described under “Appraisal Rights” beginning on page 167 of this joint proxy statement/prospectus. However, there is no action that you are requested to take at this time, other than affirmatively voting FOR the Merger Proposal, FOR the Advisory Compensation Proposal and FOR the William Lyon Homes Adjournment Proposal in accordance with one of the methods of voting set forth in the section entitled “William Lyon Homes Special Meeting—Voting of Shares” beginning on page 50 of this joint proxy statement/prospectus.

Taylor Morrison: If you are a Taylor Morrison stockholder, there is no action that you are requested to take at this time, other than affirmatively voting FOR the Share Issuance Proposal and FOR the Taylor

 

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Morrison Adjournment Proposal in accordance with one of the methods of voting set forth in the section entitled “Taylor Morrison Special Meeting—Voting of Shares beginning on page 42 of this joint proxy statement/prospectus.

 

Q:

Should I send in my William Lyon Homes stock certificates now to receive the Merger Consideration?

 

A:

No. William Lyon Homes stockholders should not send in their stock certificates to any person at this time. After the effective time of the merger, the Exchange Agent will send you a letter of transmittal and instructions for exchanging your shares of William Lyon Homes common stock for the Merger Consideration. SeeThe Merger Agreement—Exchange Procedures” beginning on page 112 of this joint proxy statement/prospectus.

 

Q:

Is the completion of the merger subject to a financing condition?

 

A:

No. The receipt of any financing by Taylor Morrison is not a condition to completion of the merger or any of the other transactions contemplated by the merger agreement and, except in certain limited circumstances in which Taylor Morrison or William Lyon Homes may be permitted to terminate the merger agreement (as more fully described in “The Merger Agreement—Termination of the Merger Agreement” beginning on page 129 of this joint proxy statement/prospectus), Taylor Morrison will be required to complete the merger (assuming that all of the conditions to its obligations to complete the merger under the merger agreement are satisfied or waived) whether or not financing is available on acceptable terms or at all. Taylor Morrison currently expects to pay the cash portion of the Merger Consideration and pay related fees and expenses in connection with the merger using borrowings under its revolving credit facility and/or cash on hand at the time of closing.

 

Q:

How will William Lyon Homes’ outstanding indebtedness be treated in the merger?

 

A:

Upon the closing of the merger, William Lyon Homes’ existing revolving credit facility will be terminated and any amounts outstanding thereunder will be repaid in full. At or prior to the closing of the merger, California Lyon expects a notice of redemption to be issued for the entire remaining $50.0 million outstanding principal amount of the William Lyon Homes 2022 Senior Notes at a redemption price equal to 100.000% of the principal amount to be redeemed plus accrued and unpaid interest to, but excluding, the redemption date. Assuming any requisite consents are obtained in connection with the merger, William Lyon Homes’ subsidiaries’ existing warehouse facilities and the loan facilities entered into by the joint ventures to which William Lyon Homes is a party will remain in place following the merger.

In addition, on December 5, 2019, a subsidiary of Taylor Morrison commenced (i) offers to exchange any and all of the outstanding William Lyon Homes 2023 Senior Notes, any and all of the outstanding William Lyon Homes 2025 Senior Notes and any and all of the outstanding William Lyon Homes 2027 Senior Notes for new notes issued by Taylor Morrison, (ii) consent solicitations soliciting from holders of the William Lyon Homes 2023 Senior Notes, the William Lyon Homes 2025 Senior Notes and the William Lyon Homes 2027 Senior Notes consents to certain amendments to the corresponding William Lyon Homes Senior Notes Indenture and (iii) change of control offers for the William Lyon Homes 2023 Senior Notes, William Lyon Homes 2025 Senior Notes and William Lyon Homes 2027 Senior Notes. On November 5, 2019, Taylor Morrison received an executed commitment letter to finance any payments required to be made under change of control offers for the William Lyon Homes Senior Notes. Because the requisite consents to the amendments described above have been delivered, the change of control offers have been terminated and Taylor Morrison will not enter into the bridge facility contemplated by the commitment letter. For more information regarding financing of the merger, see the section entitled “The Merger—Treatment of William Lyon Homes Existing Indebtedness” beginning on page 109 of this joint proxy statement/prospectus.

 

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Q:

Will the Taylor Morrison common stock issued to William Lyon Homes stockholders at the time of completion of the merger be traded on an exchange?

 

A:

Yes. It is a condition to completion of the merger that the shares of Taylor Morrison common stock to be issued to William Lyon Homes stockholders in the merger be approved for listing on the NYSE, subject to official notice of issuance. Shares of Taylor Morrison common stock are currently traded on the NYSE under the ticker symbol “TMHC.”

 

Q:

What if I hold shares of common stock in both William Lyon Homes and Taylor Morrison?

 

A:

If you are a stockholder of both William Lyon Homes and Taylor Morrison, you will receive two separate packages of proxy materials. A vote cast as a William Lyon Homes stockholder will not count as a vote cast as a Taylor Morrison stockholder, and a vote cast as a Taylor Morrison stockholder will not count as a vote cast as a William Lyon Homes stockholder. Therefore, please separately submit a separate proxy for both your shares of William Lyon Homes common stock and Taylor Morrison common stock.

 

Q:

If I am a stockholder, whom should I contact with questions?

 

A:

William Lyon Homes: If you have any questions about the merger or the William Lyon Homes special meeting, or desire additional copies of this joint proxy statement/prospectus, proxy cards or voting instruction forms, you should contact:

William Lyon Homes

4695 MacArthur Court, 8th Floor

Newport Beach, CA 92660

Attention: Investor Relations

Email: WLH@finprofiles.com

Telephone: (310) 622-8223

or

D.F. King & Co., Inc.

48 Wall Street, 22nd Floor

New York, NY 10005

Stockholders may call toll-free: (800) 334-0384

Banks and Brokers may call collect: (212) 269-5550

Email: WLH@dfking.com

Taylor Morrison: If you have any questions about the merger or the Taylor Morrison special meeting, or desire additional copies of this joint proxy statement/prospectus, proxy cards or voting instruction forms, you should contact:

Taylor Morrison Home Corporation

4900 N. Scottsdale Road, Suite 2000

Scottsdale, AZ 85251

Attention: Investor Relations

Email: investor@taylormorrison.com

Telephone: (480) 840-8100

or

Innisfree M&A Incorporated

501 Madison Ave, 20th Floor

New York, New York 10022

Stockholders may call toll-free: (888) 750-5834

Banks and Brokers may call collect: (212) 750-5833

 

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Q:

Where can I find more information about Taylor Morrison and William Lyon Homes?

 

A:

You can find more information about Taylor Morrison and William Lyon Homes from the various sources described under “Where You Can Find More Information” beginning on page 178 of this joint proxy statement/prospectus.

 

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SUMMARY

This summary highlights information contained elsewhere in this joint proxy statement/prospectus and may not contain all the information that is important to you with respect to the merger and the other business being considered at the Taylor Morrison and William Lyon Homes special meetings. Taylor Morrison and William Lyon Homes urge you to read the remainder of this joint proxy statement/prospectus carefully, including the attached annexes, and the other documents to which we have referred you. See also the section entitled “Where You Can Find More Information” beginning on page 178 of this joint proxy statement/prospectus. We have included page references in this summary to direct you to a more complete description of the topics presented below.

The Companies

Taylor Morrison Home Corporation

Taylor Morrison is one of the largest public homebuilders in the United States. Taylor Morrison is also a land developer, with a portfolio of lifestyle and master-planned communities. Taylor Morrison provides a diverse assortment of homes across a wide range of price points. Taylor Morrison strives to appeal to a broad spectrum of customers in traditionally high growth markets, where it designs, builds and sells single and multi-family detached and attached homes. Taylor Morrison operates under the Taylor Morrison and Darling Homes brand names. Taylor Morrison also provides financial services to customers through its wholly owned mortgage subsidiary, Taylor Morrison Home Funding, LLC and title insurance and closing settlement services through its title company, Inspired Title Services, LLC.

Taylor Morrison has operations in Arizona, California, Colorado, Florida, Georgia, Illinois, North Carolina, South Carolina, and Texas. Taylor Morrison’s business is organized into multiple homebuilding operating components and a financial services component, which are managed as multiple reportable segments, as follows:

 

East    Atlanta, Charlotte, Chicago, Jacksonville, Orlando, Raleigh, Southwest Florida, and Tampa
Central    Austin, Dallas, Denver, and Houston
West    Bay Area, Phoenix, Sacramento, and Southern California
Financial Services    Taylor Morrison Home Funding and Inspired Title Services

Over the last several years Taylor Morrison has grown organically and through various builder acquisitions, including its recent acquisition completed on October 2, 2018 of AV Homes, Inc. (“AV Homes”), a homebuilder and land developer of residential communities in Florida, North Carolina, South Carolina, Arizona and Texas. In addition, in April 2015 Taylor Morrison completed the acquisition of JEH Homes, an Atlanta based homebuilder; in July 2015 Taylor Morrison acquired three divisions of Orleans Homes in markets within Charlotte, Chicago and Raleigh; and in January 2016 Taylor Morrison acquired Acadia Homes in Atlanta. Collectively, each of these acquisitions represents Taylor Morrison’s strategic approach in expanding its geographic footprint in high growth markets.

Taylor Morrison’s executive offices are located at 4900 N. Scottsdale Road, Suite 2000, Scottsdale, Arizona 85251 and its telephone number is (480) 840-8100. Taylor Morrison’s website is https://www.taylormorrison.com. Information included on the Taylor Morrison website is not incorporated by reference into this joint proxy statement/prospectus. Taylor Morrison common stock is currently traded on the NYSE under the symbol “TMHC”.

William Lyon Homes

William Lyon Homes, together with its subsidiaries, is one of the largest Western U.S. regional homebuilders. Headquartered in Newport Beach, California, William Lyon Homes is primarily engaged in the



 

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design, construction, marketing and sale of single-family detached and attached homes in California, Arizona, Nevada, Colorado, Washington, Oregon and Texas. William Lyon Homes’ core markets currently include Orange County, Los Angeles, the Inland Empire, the San Francisco Bay Area, Phoenix, Las Vegas, Denver, Seattle, Portland, Austin and San Antonio. William Lyon Homes has a distinguished legacy of more than 62 years of homebuilding operations, over which time it has sold in excess of 111,000 homes. William Lyon Homes believes that its markets are characterized by attractive long-term housing fundamentals and that it has a significant land supply, with 29,242 lots owned or controlled.

William Lyon Homes has significant expertise in understanding the needs of its homebuyers and designing its product offerings to meet those needs. This allows William Lyon Homes to maximize the return on its land investments by tailoring its home offerings to meet the buyer demands in each of its markets. William Lyon Homes builds and sells across a diverse range of product lines at a variety of price points with sales to entry-level, first-time move-up, second-time move-up homebuyers, as well as a signature luxury brand and an active adult target segment. William Lyon Homes is committed to achieving the highest standards in design, quality and customer satisfaction and has received numerous industry awards and commendations throughout its operating history in recognition of its achievements.

William Lyon Homes’ executive offices are located at 4695 MacArthur Court, 8th Floor, Newport Beach California 92660, and its telephone number is (949) 833-3600. William Lyon Homes’ website is http://www.lyonhomes.com. Information included on the William Lyon Homes website is not incorporated by reference into this joint proxy statement/prospectus. William Lyon Homes Class A common stock is currently traded on the NYSE under the symbol “WLH”.

Merger Sub

Tower Merger Sub, Inc., a direct subsidiary of Taylor Morrison, is a Delaware corporation that was formed on October 30, 2019 for the sole purpose of effecting the merger. In the merger, Merger Sub will be merged with and into William Lyon Homes, with William Lyon Homes surviving the merger. As a result of the merger, William Lyon Homes will become a wholly owned, direct subsidiary of Taylor Morrison.

Merger Sub’s principal executive offices and its telephone number are the same as those of Taylor Morrison.

Taylor Morrison Special Meeting (See page 40)

General

The Taylor Morrison special meeting will be held on January 30, 2020, at 10:00 a.m., local time, at 4900 N. Scottsdale Road, 6th Floor, Scottsdale, AZ 85251. At the Taylor Morrison special meeting, Taylor Morrison stockholders will consider and vote on:

 

   

Taylor Morrison Proposal I: the approval of the issuance of shares of Taylor Morrison common stock to William Lyon Homes stockholders in connection with the merger (the “Share Issuance Proposal”); and

 

   

Taylor Morrison Proposal II: to approve an adjournment of the Taylor Morrison special meeting to another time or place, if necessary or appropriate, as determined by Taylor Morrison, to solicit additional proxies if there are insufficient votes at the time of the Taylor Morrison special meeting or any adjournments thereof to adopt the Share Issuance Proposal (the “Taylor Morrison Adjournment Proposal”).

The approval of the Share Issuance Proposal by Taylor Morrison stockholders is a condition to the obligations of Taylor Morrison and of William Lyon Homes to complete the merger.



 

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Record Date

The Taylor Morrison Board has fixed the close of business on December 23, 2019 as the record date for determination of the Taylor Morrison stockholders entitled to vote at the Taylor Morrison special meeting or any adjournment or postponement thereof (the “Taylor Morrison Record Date”). Only Taylor Morrison stockholders of record on the Taylor Morrison Record Date are entitled to receive notice of, and to vote at, the Taylor Morrison special meeting or any adjournment or postponement thereof.

As of the Taylor Morrison Record Date, there were                  shares of Taylor Morrison common stock outstanding and entitled to vote at the Taylor Morrison special meeting, held by approximately                  holders of record. With respect to each matter to be acted upon at the Taylor Morrison special meeting, each holder of Taylor Morrison common stock is entitled to one vote for each outstanding share of Taylor Morrison common stock held by such holder.

Quorum

A quorum of the outstanding shares of Taylor Morrison common stock is necessary to take action at the Taylor Morrison special meeting. The presence in person or by proxy of the holders of a majority of the voting power of shares of Taylor Morrison common stock entitled to vote at the Taylor Morrison special meeting will constitute a quorum at the Taylor Morrison special meeting. Shares of Taylor Morrison common stock held by a beneficial owner in “street name” who does not give the nominee or other intermediary that holds such shares instructions on how to vote such shares on any proposal to be voted on at the Taylor Morrison special meeting (a “broker non-vote”) will not be deemed to be in attendance at the meeting or counted for purposes of determining whether a quorum has been achieved. However, abstentions will be counted as present in determining the existence of a quorum.

Required Vote

The required number of votes to approve the matters to be voted upon at the Taylor Morrison special meeting depends on the particular item to be voted upon as set out below:

 

    

Item

  

Vote Necessary for Approval*

Taylor Morrison Proposal I    Share Issuance Proposal    Approval requires the affirmative vote of a majority in voting power of shares of Taylor Morrison common stock present in person or represented by proxy and entitled to vote thereon, assuming a quorum is present.
Taylor Morrison Proposal II    Taylor Morrison Adjournment Proposal    Approval requires the affirmative vote of a majority in voting power of shares of Taylor Morrison common stock present in person or represented by proxy and entitled to vote thereon.

 

*

Abstentions and Broker Non-Votes. Abstentions will have the same effect as a vote against the Share Issuance Proposal and the Taylor Morrison Adjournment Proposal. Under the rules of the New York Stock Exchange, if you hold your shares of Taylor Morrison common stock in street name, your nominee or intermediary may not vote your shares on proposals without instructions from you, other than “routine” proposals. None of the proposals that will be voted on at the Taylor Morrison special meeting are “routine.” Therefore, your nominee or intermediary does not have discretionary authority to vote on any of the proposals. Accordingly, if you do not provide voting instructions to your nominee or intermediary on any proposal, your shares will not be deemed in attendance at the Taylor Morrison special meeting and will not be voted. If you provide voting instructions to your nominee or intermediary on fewer than one but not both proposals, your shares will not be voted on whichever proposal you did not provide voting instructions for. Any shares of Taylor Morrison



 

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  common stock deemed not in attendance at the meeting, whether due to a record holder’s failure to vote in person or by proxy or a “street name” holder’s failure to provide any voting instructions to such holder’s nominee or intermediary, and broker non-votes, will have no effect on the Share Issuance Proposal or the Taylor Morrison Adjournment Proposal, assuming a quorum is present.

Share Ownership of and Voting by Taylor Morrison Directors and Executive Officers

At the Taylor Morrison Record Date, Taylor Morrison’s directors and executive officers and their affiliates beneficially owned and had the right to vote at the Taylor Morrison special meeting an aggregate of shares of Taylor Morrison common stock, which represents                 % of the voting power of the outstanding shares of Taylor Morrison common stock entitled to vote at the Taylor Morrison special meeting.

It is expected that Taylor Morrison’s directors and executive officers will vote their respective shares of Taylor Morrison common stock “FOR” the Share Issuance Proposal and “FOR” the approval of the Taylor Morrison Adjournment Proposal.

The William Lyon Homes Special Meeting (See page 47)

General

The William Lyon Homes special meeting will be held on January 30, 2020, at 9:00 a.m., local time, at the Renaissance Newport Beach Hotel, 4500 MacArthur Boulevard, Newport Beach, California 92660. At the William Lyon Homes special meeting, William Lyon Homes stockholders will consider and vote on:

 

   

Proposal I: the adoption of the merger agreement, pursuant to which Merger Sub will be merged with and into William Lyon Homes, with William Lyon Homes continuing as the Surviving Corporation in the merger and a wholly owned, direct subsidiary of Taylor Morrison (which we refer to as the “Merger Proposal”);

 

   

Proposal II: to approve, on an advisory, non-binding basis, certain compensation that may become payable to the named executive officers of William Lyon Homes in connection with the merger (the “Advisory Compensation Proposal”); and

 

   

Proposal III: to approve an adjournment of the William Lyon Homes special meeting to another time or place, if necessary or appropriate, as determined by William Lyon Homes, to solicit additional proxies if there are insufficient votes at the time of the William Lyon Homes special meeting or any adjournments thereof to adopt the Merger Proposal (the “William Lyon Homes Adjournment Proposal”).

The adoption of the Merger Proposal is a condition to the obligations of Taylor Morrison and of William Lyon Homes to complete the merger.

William Lyon Homes Record Date

The William Lyon Homes Board has fixed the close of business on December 23, 2019 as the record date for determination of the William Lyon Homes stockholders entitled to vote at the William Lyon Homes special meeting or any adjournment or postponement thereof (which date is referred to as the “William Lyon Homes Record Date”). Only William Lyon Homes stockholders of record on the William Lyon Homes Record Date are entitled to receive notice of, and to vote at, the William Lyon Homes special meeting or any adjournment or postponement thereof.



 

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As of the William Lyon Homes Record Date, there were                shares of William Lyon Homes Class A common stock held by approximately                holders of record and                shares of William Lyon Homes Class B common stock held by approximately                holders of record, in each case, outstanding and entitled to vote at the William Lyon Homes special meeting. With respect to each matter to be acted upon at the William Lyon Homes special meeting, each holder of shares of William Lyon Homes Class A common stock is entitled to one vote for each outstanding share of William Lyon Homes Class A common stock held by such holder and each holder of shares of William Lyon Homes Class B common stock is entitled to five votes for each outstanding share of William Lyon Homes Class B common stock held by such holder with holders of William Lyon Homes Class A common stock and William Lyon Homes Class B common stock voting together as a single class on all matters submitted to a vote of stockholders at the William Lyon Homes special meeting.

As described in further detail under the heading “The Voting Agreement” beginning on page 133 of this joint proxy statement/prospectus, Taylor Morrison, William H. Lyon, Lyon Shareholder 2012, LLC and The William Harwell Lyon Separate Property Trust established July 28, 2000 (collectively, “the Lyon Stockholders”), entered into a voting agreement pursuant to which, among other things, the Lyon Stockholders agreed to vote all outstanding shares of William Lyon Homes common stock currently held or thereafter acquired by the Lyon Stockholders (representing approximately      % of the outstanding shares of William Lyon Homes common stock as of the William Lyon Homes Record Date) in favor of the adoption of the merger agreement and against any proposal by third parties to acquire William Lyon Homes and to take certain other actions in furtherance of the transactions contemplated by the merger agreement. In the event that the William Lyon Homes Board changes its recommendation that the William Lyon Homes stockholders vote for adoption of the merger agreement, the Lyon Stockholders will only be required under the voting agreement to vote shares of William Lyon Homes common stock equal to 30% of the aggregate voting power attributable to the outstanding shares of William Lyon Homes common stock in accordance with the foregoing terms.

Quorum

A quorum of the outstanding shares of William Lyon Homes common stock is necessary to take action at the William Lyon Homes special meeting. The presence in person or by proxy of the holders of a majority in voting power of all of the shares of William Lyon Homes common stock entitled to vote at the William Lyon Homes special meeting will constitute a quorum at the William Lyon Homes special meeting. Shares held by a beneficial owner in “street name” who does not give the nominee or other intermediary that holds such shares instructions on how to vote such shares on any proposal to be voted on at the William Lyon Homes special meeting (a “broker non-vote”) will not be deemed to be in attendance at the meeting or counted for purposes of determining whether a quorum has been achieved. However, abstentions will be counted as present in determining the existence of a quorum.



 

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Required Vote

The required number of votes to approve the matters to be voted upon at the William Lyon Homes special meeting depends on the particular item to be voted upon as set out below:

 

    

Item

  

Vote Necessary for Approval*

Proposal I    The Merger Proposal    Approval requires the affirmative vote, in person or by proxy, of holders of a majority of the voting power of the shares of William Lyon Homes common stock outstanding as of the William Lyon Homes Record Date entitled to vote on the Merger Proposal.
Proposal II    The Advisory Compensation Proposal    Approval requires the affirmative vote, in person or by proxy, of the holders of a majority of the voting power of the shares of William Lyon Homes common stock cast at a meeting where a quorum is present.
Proposal III    The William Lyon Homes Adjournment Proposal    Approval requires the affirmative vote, in person or by proxy, of the holders of a majority of the voting power of the shares of William Lyon Homes common stock cast at a meeting where a quorum is present.

 

*

Abstentions and Broker Non-Votes. Abstentions will have the same effect as a vote against the Merger Proposal, and will have no effect on the Advisory Compensation Proposal or the William Lyon Homes Adjournment Proposal. Under the rules of the New York Stock Exchange, if you hold your shares of William Lyon Homes common stock in street name, your nominee or intermediary may not vote your shares on proposals without instructions from you, other than “routine” proposals. None of the proposals that will be voted on at the William Lyon Homes special meeting are “routine.” Therefore, your nominee or intermediary does not have discretionary authority to vote on any of the proposals. Accordingly, if you do not provide voting instructions to your nominee or intermediary on any proposal, your shares will not be deemed in attendance at the William Lyon Homes special meeting and will not be voted. If you provide voting instructions to your nominee or intermediary on one or more but fewer than all three proposals, your shares will not be voted on whichever proposal(s) you did not provide voting instructions for. Any shares of William Lyon Homes common stock deemed not in attendance at the meeting, whether due to a record holder’s failure to vote in person or by proxy or a “street name” holder’s failure to provide any voting instructions to such holder’s nominee or intermediary, and broker non-votes, will have the same effect as a vote against the Merger Proposal but will have no effect on the William Lyon Homes Adjournment Proposal or the Advisory Compensation Proposal, assuming a quorum is present.

Share Ownership of and Voting by William Lyon Homes Directors and Executive Officers

At the William Lyon Homes Record Date, William Lyon Homes’ directors and executive officers and their affiliates beneficially owned and had the right to vote at the William Lyon Homes special meeting an aggregate of                shares of William Lyon Homes Class A common stock and                shares of William Lyon Homes Class B common stock, which represents                % of the voting power of the outstanding shares of William Lyon Homes common stock entitled to vote at the William Lyon Homes special meeting.

It is expected that William Lyon Homes’ directors and executive officers will vote their respective shares “FOR” the Merger Proposal, “FOR” the Advisory Compensation Proposal and “FOR” the William Lyon Homes Adjournment Proposal.



 

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The Merger Agreement and the Merger

In the merger, Merger Sub will be merged with and into William Lyon Homes, with William Lyon Homes being the Surviving Corporation in the merger. As a result of the merger, William Lyon Homes will become a wholly owned, direct subsidiary of Taylor Morrison and William Lyon Homes will no longer be a publicly traded company. Under certain circumstances, an alternative structure may be utilized in which, immediately following the first merger, William Lyon Homes would be merged as part of one integrated transaction into a limited liability company wholly owned by Taylor Morrison that is classified as a disregarded entity for U.S. federal income tax purposes.

The merger will not be completed without the adoption of the merger agreement by William Lyon Homes stockholders and approval of the Share Issuance Proposal by Taylor Morrison stockholders.

A copy of the merger agreement is attached as Annex A to this joint proxy statement/prospectus. You are urged to read the merger agreement in its entirety because it is the legal document that governs the merger. For more information on the merger and the merger agreement, seeThe Merger” and The Merger Agreement” beginning on pages 56 and 111, respectively, of this joint proxy statement/prospectus.

As of the date of this joint proxy statement/prospectus, it is not possible to accurately estimate the closing date for the merger because the merger is subject to the satisfaction (or, to the extent permitted by applicable law, waiver) of the conditions to Taylor Morrison’s and William Lyon Homes’ obligations to complete the merger, some of which are not within the control of such parties; however, Taylor Morrison and William Lyon Homes currently expect the merger to close late in the first quarter or early in the second quarter of 2020. No assurance can be given as to when, or if, the merger will be completed.

The Voting Agreement (See page 133)

On November 5, 2019, Taylor Morrison, on one hand, and William H. Lyon, Lyon Shareholder 2012, LLC and The William Harwell Lyon Separate Property Trust established July 28, 2000 (collectively, the “Lyon Stockholders”), on the other hand, entered into a voting agreement.

Pursuant to the terms of the voting agreement, the Lyon Stockholders agreed, among other things, to vote all issued and outstanding shares of William Lyon Homes common stock currently held or thereafter acquired by the Lyon Stockholders (representing approximately     % of the outstanding shares of William Lyon Homes common stock as of the William Lyon Homes Record Date) (i) in favor of the adoption of the merger agreement, (ii) in favor of any proposal to adjourn the William Lyon Homes special meeting to solicit additional proxies in favor of the adoption of the merger agreement and the approval of the merger if there are not sufficient votes to adopt the merger agreement and approve the merger on the date of the William Lyon Homes special meeting, (iii) against approval of any proposal made in opposition to, in competition with, or that would result in a breach of the merger agreement or the merger or any other transactions contemplated by the merger agreement, and (iv) against certain other actions that would reasonably be expected to prevent, interfere with, or materially impair or delay, the consummation of the merger or any of the other transactions contemplated by the merger agreement. In the event that the William Lyon Homes Board changes its recommendation that the William Lyon Homes stockholders vote for adoption of the merger agreement, the Lyon Stockholders will only be required under the voting agreement to vote shares of William Lyon Homes common stock equal to 30% of the aggregate voting power attributable to the outstanding shares of William Lyon Homes common stock in accordance with the foregoing terms. Mr. Lyon also agreed to the treatment of that certain warrant held by Mr. Lyon (the “Class B Warrant”) as contemplated by the merger agreement. In connection with the treatment of the Class B Warrant, Taylor Morrison agreed to take all action reasonably necessary to cause any Taylor Morrison common stock issuable upon exercise of the Replacement Warrant to be listed to be eligible for trading on the NYSE for as long as the Replacement Warrant remains outstanding. For more information regarding the treatment of the Class B



 

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Warrant as contemplated by the merger agreement, seeThe Merger Agreement—Treatment of William Lyon Homes Class B Warrant” beginning on page 126 of this joint proxy statement/prospectus.

In addition, the voting agreement provides for a six-month lock-up, from the effective time of the merger, on any Taylor Morrison common stock received by the Lyon Stockholders in the merger as Stock Consideration, restricting the Lyon Stockholders from transferring or disposing of such Taylor Morrison common stock for such period (the “Lock-Up”).

The voting agreement will terminate automatically on the first to occur of (i) certain amendments or waivers of the merger agreement without William H. Lyon’s prior consent, (ii) the effective time of the merger (with the exception of the obligations under the Lock-Up, which shall terminate six months after such time), (iii) the termination of the merger agreement in accordance with its terms and (iv) the written consent of the parties to the voting agreement. SeeThe Voting Agreement” beginning on page 133 of this joint proxy statement/prospectus.

Merger Consideration (See page 112)

At the effective time of the merger, each share of William Lyon Homes common stock (other than Excluded Shares, as defined below under “The Merger Agreement—Merger Consideration” beginning on page 112 of this joint proxy statement/prospectus) will be converted into the right to receive (a) Stock Consideration, consisting of 0.8000 validly issued, fully paid and non-assessable shares of Taylor Morrison common stock and (b) Cash Consideration, consisting of $2.50 in cash. For more information seeThe Merger Agreement” beginning on page 111 of this joint proxy statement/prospectus.

Taylor Morrison’s Reasons for the Merger and Share Issuance; Recommendation of the Taylor Morrison Board of Directors (See page 69)

In evaluating the merger and other transactions contemplated by the merger agreement, including the merger and the Share Issuance, the Taylor Morrison Board consulted with Taylor Morrison’s senior management and Taylor Morrison’s outside legal counsel and financial advisor. After consideration, the members of the Taylor Morrison Board unanimously determined that the merger agreement and the transactions contemplated by the merger agreement, including the merger and the Share Issuance, are advisable, fair to, and in the best interests of, Taylor Morrison and its stockholders, and approved, adopted and declared advisable the merger agreement and the other transactions contemplated by the merger agreement, including the proposed merger and the Share Issuance. For more information regarding the factors considered by the Taylor Morrison Board in reaching its decision to approve the merger agreement, including the merger and the Share Issuance contemplated by the merger agreement, seeThe Merger—Taylor Morrisons Reasons for the Merger; Recommendations of the Taylor Morrison Board” beginning on page 69 of this joint proxy statement/prospectus.

William Lyon Homes’ Reasons for the Merger; Recommendation of the William Lyon Homes Board of Directors (See page 72)

In evaluating the merger and other transactions contemplated by the merger agreement, the William Lyon Homes Board consulted with William Lyon Homes’ senior management and William Lyon Homes’ outside legal counsel and financial advisors. After consideration, the members of the William Lyon Homes Board unanimously determined that the merger agreement and the transactions contemplated by the merger agreement, including the merger, are advisable, fair to, and in the best interests of, William Lyon Homes and its stockholders, and approved, adopted and declared advisable the merger agreement and the other transactions contemplated by the merger agreement, including the proposed merger. For more information regarding the factors considered by the William Lyon Homes Board in reaching its decision to approve the merger agreement and the merger, seeThe Merger—William Lyon Homes’ Reasons for the Merger; Recommendation of the William Lyon Homes Board of Directors.”



 

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The William Lyon Homes Board recommends that William Lyon Homes stockholders vote “FOR” the Merger Proposal, “FOR” the Advisory Compensation Proposal and “FOR” the William Lyon Homes Adjournment Proposal.

Opinion of Taylor Morrison’s Financial Advisor, Citi (See page 78)

Taylor Morrison retained Citigroup Global Markets Inc. (“Citi”) as its financial advisor in connection with a possible transaction involving William Lyon Homes. In connection with Citi’s engagement, Taylor Morrison requested that Citi evaluate the fairness, from a financial point of view, to Taylor Morrison of the exchange ratio set forth in the merger agreement, taking into account the Cash Consideration per share of William Lyon Homes common stock to be paid by Taylor Morrison pursuant to the merger agreement. On November 5, 2019, at a meeting of the Taylor Morrison Board held to evaluate the proposed merger and at which the merger agreement was approved, Citi rendered to the Taylor Morrison Board an oral opinion, confirmed by delivery of a written opinion, dated November 5, 2019, to the effect that, as of that date and based on and subject to various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken by Citi as set forth in its written opinion, the exchange ratio, taking into account the Cash Consideration per share of William Lyon Homes common stock to be paid by Taylor Morrison pursuant to the merger agreement, was fair, from a financial point of view, to Taylor Morrison.

The full text of Citi’s written opinion, dated November 5, 2019, to the Taylor Morrison Board, which sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken by Citi in rendering its opinion, is attached to this joint proxy statement/prospectus as Annex C and is incorporated herein by reference in its entirety. The summary of Citi’s opinion in the section entitled “The Merger—Opinion of Taylor Morrison’s Financial Advisor, Citi” beginning on page 78 of this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of Citi’s opinion. Citi’s opinion was rendered to the Taylor Morrison Board (in its capacity as such) in connection with its evaluation of the proposed merger and was limited to the fairness, from a financial point of view, as of the date of the opinion, to Taylor Morrison of the exchange ratio, taking into account the Cash Consideration per share of William Lyon Homes common stock to be paid by Taylor Morrison pursuant to the merger agreement. Citi’s opinion did not address any other aspects or implications of the proposed merger or the merger agreement. Citi’s opinion is not intended to be and does not constitute a recommendation to any stockholder as to how such stockholder should vote or act on any matters relating to the proposed merger or otherwise.

For more information, see the section entitled “The Merger—Opinion of Taylor Morrison’s Financial Advisor, Citi” beginning on page 78 of this joint proxy statement/prospectus.

Opinion of William Lyon Homes’ Financial Advisor, J.P. Morgan (See page 87)

At the meeting of the William Lyon Homes Board on November 5, 2019, J.P. Morgan Securities LLC (“J.P. Morgan”) rendered its oral opinion to the William Lyon Homes Board, later confirmed by the delivery of a written opinion, dated November 5, 2019, that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the consideration to be paid to the holders of shares of William Lyon Homes common stock in the proposed merger was fair, from a financial point of view, to such holders. The full text of the opinion, dated November 5, 2019, to the William Lyon Homes Board, which describes, among other things, the assumptions made, procedures followed, matters considered and limitations on the review undertaken, is attached as Annex D to this document and is incorporated by reference herein in its entirety. The summary of the opinion of J.P. Morgan set forth in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of such opinion. J.P. Morgan’s written opinion was addressed to the William Lyon Homes Board (in its capacity as such) in connection with and for the purposes of its evaluation of the proposed merger, was directed only to the consideration to be paid in the merger and did not address any other



 

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aspect of the merger. J.P. Morgan expressed no view as to, and its opinion did not address, the underlying business decision of William Lyon Homes to effect or enter into the merger. J.P. Morgan’s opinion was necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to it as of, the date of the opinion. The J.P. Morgan opinion is not intended to be and does not constitute a recommendation to any stockholder as to how such stockholder should vote or act on any matters relating to the proposed merger or otherwise.

For more information, see the section entitled “The Merger—Opinion of William Lyon Homes’ Financial Advisor, J.P. Morgan” beginning on page 87 of this joint proxy statement/prospectus.

Interests of Certain William Lyon Homes Directors and Officers in the Merger (See page 100)

In considering the recommendation of the William Lyon Homes Board that William Lyon Homes stockholders vote “FOR” the adoption of the merger agreement, William Lyon Homes stockholders should be aware of and take into account the fact that certain William Lyon Homes directors and executive officers have interests in the merger that may be different from, or in addition to, the interests of William Lyon Homes stockholders generally. These interests include, among others, potential severance benefits and other payments, the treatment of outstanding equity awards pursuant to the merger agreement, and certain indemnification rights of William Lyon Homes directors and officers under the merger agreement.

The William Lyon Homes Board was aware of and carefully considered these interests, among other matters, in evaluating the terms and structure, and overseeing the negotiation of the merger, in approving the merger agreement and in recommending that the William Lyon Homes stockholders vote “FOR” the Merger Proposal. For additional information about these interests, seeThe Merger—Interests of Certain William Lyon Homes Directors and Officers in the Merger” beginning on page 100 of this joint proxy statement/prospectus.

Interests of Certain Taylor Morrison Directors and Officers in the Merger (See page 107)

In considering the recommendation of the Taylor Morrison Board to vote “FOR” the Share Issuance Proposal, Taylor Morrison stockholders should be aware that certain members of the Taylor Morrison Board and certain executive officers of Taylor Morrison may have interests in the merger that may be different from, or in addition to, their interests as Taylor Morrison stockholders. The Taylor Morrison Board was aware of these interests during its deliberations on the merits of the merger and in making its decision to approve the merger agreement and to recommend to Taylor Morrison stockholders the approval of the Share Issuance Proposal and the Taylor Morrison Adjournment Proposal. Each of the current members of the Taylor Morrison Board will continue as a director of the combined company following the completion of the merger and will hold office from and after the completion of the merger until his or her successor is duly elected and qualified or until his or her earlier death, resignation, retirement or removal.

Each of the current executive officers of Taylor Morrison will continue to serve in their current positions following the completion of the merger.

For a more complete discussion of the interests of the directors and executive officers of Taylor Morrison in the merger, see The Merger—Interests of Certain Taylor Morrison Directors and Officers in the Merger beginning on page 107 of this joint proxy statement/prospectus.

Board of Directors and Management Following the Merger (See page 107)

Pursuant to the merger agreement, promptly following the merger, two new directors will be appointed to the Taylor Morrison Board who are currently members of the William Lyon Homes Board and are mutually



 

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selected by Taylor Morrison and William Lyon Homes. William Lyon Homes and Taylor Morrison have agreed that William H. Lyon will be one of the two directors. SeeWhere You Can Find More Information” beginning on page 178 of this joint proxy statement/prospectus.

Material U.S. Federal Income Tax Consequences of the Merger (See page 136)

Taylor Morrison and William Lyon Homes intend the merger to qualify as a “reorganization” within the meaning of Section 368(a) of the Code. The merger for this purpose includes the first merger and the second merger, if it occurs, as part of one integrated plan of reorganization for U.S. federal income tax purposes. Taylor Morrison and William Lyon Homes have agreed to use their best efforts to cause the merger to qualify as a reorganization under Section 368(a) of the Code, and not to take any actions independent of the transactions contemplated by the merger agreement that are reasonably likely to cause the merger to fail to so qualify. For a description of certain of the considerations regarding U.S. federal tax consequences of the merger, see the section entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 136 of this joint proxy statement/prospectus.

Treatment of William Lyon Homes Equity Awards (See page 125)

Pursuant to the merger agreement, at the effective time, each outstanding and unexercised option to purchase shares of William Lyon Homes common stock (each, a “William Lyon Homes Option”), whether vested or unvested, exercisable or not exercisable, will be substituted and converted into an option to purchase a number of whole shares of Taylor Morrison common stock (each, a “Taylor Morrison Option”) equal to the product obtained by multiplying (i) the number of shares of William Lyon Homes common stock subject to such William Lyon Homes Option immediately prior to the effective time by (ii) the sum of (x) 0.8000 and (y) the quotient obtained by dividing $2.50 by the volume weighted average per-share price of a share of Taylor Morrison common stock during the ten full trading days ending on (and including) the trading day immediately preceding the closing date (the sum, the “Equity Award Exchange Ratio”). The exercise price per share of such Taylor Morrison Option will be equal to the quotient obtained by dividing (i) the exercise price per share of William Lyon Homes common stock underlying such William Lyon Homes Option immediately prior to the effective time by (ii) the Equity Award Exchange Ratio. Following the effective time, such Taylor Morrison Options will be subject to the same vesting and acceleration of vesting terms and conditions as, and have other terms and conditions that are substantially similar to, those that applied to the William Lyon Homes Options immediately prior to the effective time.

At the effective time, each outstanding award of shares of William Lyon Homes common stock subject to vesting, repurchase or other lapse restrictions granted under a William Lyon Homes equity plan (each, a “William Lyon Homes Restricted Stock Award”) will be substituted and converted into a corresponding award in respect of shares of Taylor Morrison common stock (each, a “Taylor Morrison Restricted Stock Award”), with the number of whole shares of Taylor Morrison common stock underlying each such Taylor Morrison Restricted Stock Award equal to the product obtained by multiplying (i) the number of shares of William Lyon Homes common stock underlying such William Lyon Homes Restricted Stock Award immediately prior to the effective time by (ii) the Equity Award Exchange Ratio. Following the effective time, such Taylor Morrison Restricted Stock Awards will be subject to the same vesting and acceleration of vesting terms and conditions (other than any performance-based vesting conditions) as, and have other terms and conditions that are substantially similar to, those that applied to the William Lyon Homes Restricted Stock Award immediately prior to the effective time.

At the effective time, each outstanding performance stock unit award in respect of shares of William Lyon Homes common stock (each, a “William Lyon Homes PSU Award”) will be substituted and converted into an award of restricted stock units to be settled in shares of Taylor Morrison common stock (each, a “Taylor



 

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Morrison RSU Award”), with the number of whole shares of Taylor Morrison common stock underlying each such Taylor Morrison RSU Award equal to the product obtained by multiplying (i) the number of shares of William Lyon Homes common stock underlying such William Lyon Homes PSU Award immediately prior to the effective time (assuming that any performance-based vesting conditions applicable to such award for any performance period that has not been completed as of the effective time are achieved at target levels) by (ii) the Equity Award Exchange Ratio. Following the effective time, such Taylor Morrison RSU Awards will be subject to the same vesting and acceleration of vesting terms and conditions (other than any performance-based vesting conditions) as, and have other terms and conditions that are substantially similar to, those that applied to the William Lyon Homes PSU Awards immediately prior to the effective time.

Treatment of William Lyon Homes Class B Warrant (See page 126)

At the effective time of the merger, by virtue of the merger and without any action on the part of the holders thereof, the Class B Warrant will be substituted and converted at the effective time of the merger, by Taylor Morrison issuing a warrant (the “Replacement Warrant”) to be settled in shares of Taylor Morrison common stock in substitution of the Class B Warrant exercisable for (i) a number of whole shares of Taylor Morrison common stock (rounded down to the nearest whole share) equal to the product obtained by multiplying (x) the number of shares of William Lyon Homes Class B common stock subject to the Class B Warrant immediately prior to the effective time of the merger by (y) the Equity Award Exchange Ratio, and (ii) at an exercise price per share (rounded up to the nearest cent) equal to the quotient obtained by dividing (x) the exercise price per share of William Lyon Homes Class B common stock underlying the Class B Warrant immediately prior to the effective time of the merger by (y) the Equity Award Exchange Ratio. The Replacement Warrant will be exercisable on a net basis and will otherwise contain terms that are substantially similar to those of the Class B Warrant. For more information, see the section entitled “The Merger Agreement—Treatment of William Lyon Homes Class B Warrant” beginning on page 126 of this joint proxy statement/prospectus.

Treatment of William Lyon Homes’ Existing Indebtedness (See page 109)

Upon the closing of the merger, William Lyon Homes’ existing revolving credit facility will be terminated and any amounts outstanding thereunder will be repaid in full. At or prior to the closing of the merger, California Lyon expects a notice of redemption to be issued for the entire remaining $50.0 million outstanding principal amount of the William Lyon Homes 2022 Senior Notes at a redemption price equal to 100.000% of the principal amount to be redeemed plus accrued and unpaid interest to, but excluding, the redemption date. Assuming any consents required in connection with the merger are obtained, William Lyon Homes’ subsidiaries’ existing warehouse facilities and the loan facilities entered into by the joint ventures to which William Lyon Homes is a party will remain in place following the merger.

In addition, on December 5, 2019, a subsidiary of Taylor Morrison commenced (i) offers to exchange any and all of the outstanding William Lyon Homes 2023 Senior Notes, any and all of the outstanding William Lyon Homes 2025 Senior Notes and any and all of the outstanding William Lyon Homes 2027 Senior Notes for new notes issued by Taylor Morrison, (ii) consent solicitations soliciting from holders of the William Lyon Homes 2023 Senior Notes, the William Lyon Homes 2025 Senior Notes and the William Lyon Homes 2027 Senior Notes consents to certain amendments to the corresponding William Lyon Homes Senior Notes Indenture and (iii) change of control offers for the William Lyon Homes 2023 Senior Notes, William Lyon Homes 2025 Senior Notes and William Lyon Homes 2027 Senior Notes.

On November 5, 2019, Taylor Morrison received an executed commitment letter that contemplates up to $1.1 billion in debt financing under an unsecured bridge facility to finance any payments required to be made under change of control offers for the William Lyon Homes Senior Notes. Because the requisite consents to the amendments described above have been delivered, the change of control offers have been terminated and Taylor Morrison will not enter into the bridge facility contemplated by the commitment letter.



 

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Accounting Treatment of the Merger (See page 108)

In accordance with GAAP, Taylor Morrison will account for the merger using the acquisition method of accounting, with Taylor Morrison being considered the accounting acquirer of William Lyon Homes for accounting purposes. This means that Taylor Morrison will allocate the purchase price to the fair value of William Lyon Homes assets acquired and liabilities assumed at the acquisition date, with the excess purchase price, if any, being recorded as goodwill. Under the acquisition method of accounting, goodwill is not amortized but is tested for impairment at least annually. The operating results of William Lyon Homes will be reported as part of the combined company beginning on the closing date. The final valuation of the tangible and identifiable intangible assets acquired and liabilities assumed has not yet been completed and is not required to be completed under applicable guidance until 12 months after completion of the merger. The finalization of the valuation could result in significantly different amortization expenses and balance sheet classifications than those presented in Taylor Morrison’s unaudited pro forma condensed combined financial information included in this joint proxy statement/prospectus.

Litigation Relating to the Merger (See page 108)

Two complaints related to the merger have been filed. The two complaints are captioned: Stein v. William Lyon Homes, et al., Case No. 19-cv-02380, which was filed by a purported William Lyon Homes shareholder in the United States District Court for the Central District of California on December 10, 2019; and Kent v. William Lyon Homes, et al., Case No. 19-cv-02276, which was filed on behalf of a putative class of William Lyon Homes’ public shareholders in the United States District Court for the District of Delaware on December 13, 2019. Both complaints name as defendants William Lyon Homes and its directors, and a former director. The Kent complaint also names Taylor Morrison and Merger Sub as defendants. The complaints generally allege that William Lyon Homes and its directors violated federal securities laws by failing to disclose material information in the version of this joint proxy statement/prospectus filed with the SEC on December 6, 2019. The Kent complaint also alleges that the omissions constitute violations of federal securities laws by Taylor Morrison and Merger Sub. The complaints seek, among other things, injunctive relief preventing the consummation of the merger, damages, and an award of plaintiffs’ expenses and attorneys’ fees. The defendants believe that the claims respectively asserted against them are wholly without merit and intend to defend against them.

Regulatory Approvals Required to Complete the Merger (See page 108)

Taylor Morrison has determined that no authorizations, approvals or consents from regulatory authorities are required to enable the parties to complete the merger. For a more complete discussion of regulatory matters relating to the merger, seeThe Merger—Regulatory Approvals Required to Complete the Merger” beginning on page 108 of this joint proxy statement/prospectus.

Conditions to Completion of the Merger is Subject to Certain Conditions (See page 127)

As more fully described in this joint proxy statement/prospectus and in the merger agreement, the obligations of Taylor Morrison and William Lyon Homes to complete the merger are subject to the satisfaction of a number of conditions, including the following:

 

   

the adoption of the merger agreement by William Lyon Homes stockholders at the William Lyon Homes Special Meeting (or at any adjournment or postponement thereof);

 

   

the approval of the Share Issuance by Taylor Morrison stockholders at the Taylor Morrison Special Meeting (or at any adjournment or postponement thereof);

 

   

the effectiveness of the registration statement of which this joint proxy statement/prospectus forms a part and the absence of a stop order in respect thereof or proceedings initiated or threatened by the SEC related thereto;



 

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the approval for listing on NYSE of the shares of Taylor Morrison common stock to be issued in the merger and such other shares of Taylor Morrison common stock to be reserved for issuance in connection with the merger;

 

   

the absence of any temporary, preliminary or permanent restraining order, injunction or other order then in effect issued by any court of competent jurisdiction or any other government entity of competent jurisdiction restraining, enjoining, preventing or otherwise prohibiting or making illegal the consummation of the merger or any of the other transactions contemplated by the merger agreement, and the absence of any law enacted, promulgated or deemed applicable to the merger by any governmental entity of competent jurisdiction restraining, enjoining, preventing or otherwise prohibiting the consummation of the merger;

 

   

subject to certain exceptions, the accuracy of the respective representations and warranties of Taylor Morrison and William Lyon Homes, and compliance by Taylor Morrison and William Lyon Homes with their respective covenants, in each case, as set forth in the merger agreement;

 

   

the absence of a material adverse effect relating to William Lyon Homes;

 

   

the absence of a material adverse effect relating to Taylor Morrison;

 

   

the receipt by Taylor Morrison and William Lyon Homes of a customary closing certificate on behalf of each other respective party by an authorized officer of each other respective party; and

 

   

the receipt by William Lyon Homes of a tax opinion stating that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code, as amended.

For more information, seeThe Merger Agreement—Conditions to Completion of the Merger” beginning on page 127 of this joint proxy statement/prospectus.

No Solicitation of Alternative Proposals (See page 120)

The merger agreement precludes both Taylor Morrison and William Lyon Homes from soliciting or engaging in discussions or negotiations with a third party with respect to any proposal for a competing transaction, including the acquisition of a significant interest in such party’s capital stock or assets. However, if, prior to obtaining the applicable stockholder approval in connection with the merger, either party receives an unsolicited proposal from a third party for a competing transaction that such party’s board of directors, among other things, determines in good faith (after consultation with outside counsel and a financial advisor of nationally recognized reputation) (i) constitutes or would reasonably be expected to lead to a proposal that is superior to the merger, and (ii) did not result from a breach of the non-solicitation obligations set forth in the merger agreement, then such party may furnish non-public information to and enter into discussions with that third party and its representatives and financing sources about such competing transaction after obtaining from such third party an executed confidentiality agreement (subject to promptly and, in any event, within twenty-four (24) hours, notifying the other party of the status and material details thereof (including copies of any written documentation that is material to such unsolicited proposal)). For more information, seeThe Merger Agreement—No Solicitation of Alternative Proposals” beginning on page 120 of this joint proxy statement/prospectus.

Termination of the Merger Agreement (See page 129)

The merger agreement may be terminated and the merger abandoned at any time before the effective time of the merger in the following circumstances:

 

   

by the mutual written consent of Taylor Morrison and William Lyon Homes;



 

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by either Taylor Morrison or William Lyon Homes if:

 

   

the merger is not consummated by the Outside Date;

 

   

any court of competent jurisdiction or governmental entity has issued a final and non-appealable judgment or order permanently enjoining or otherwise permanently prohibiting the consummation of the merger;

 

   

William Lyon Homes stockholders fail to adopt the merger agreement at the William Lyon Homes Special Meeting (or at any adjournment or postponement thereof);

 

   

Taylor Morrison stockholders fail to approve the Share Issuance at the Taylor Morrison Special Meeting (or at any adjournment or postponement thereof);

 

   

the other party (or Merger Sub, in case of termination by William Lyon Homes) has breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements, which breach or failure to perform (i) would give rise to the failure of any closing condition relating to the accuracy of such other party’s representations and warranties or such other party’s compliance with covenants would fail to be satisfied, and (ii) such inaccuracy or breach is either incapable of being cured or is not cured within 30 days after receiving written notice thereof;

 

   

by Taylor Morrison, before the adoption of the merger agreement by William Lyon Homes stockholders, if the William Lyon Homes Board changes its recommendation to William Lyon Homes stockholders to vote in favor of the adoption of the merger agreement, in accordance with the terms and provisions of the merger agreement;

 

   

by William Lyon Homes, before the approval of the Share Issuance by Taylor Morrison stockholders, if the Taylor Morrison Board changes its recommendation to Taylor Morrison stockholders to vote in favor of the approval of the Share Issuance, in accordance with the terms and provisions of the merger agreement; or

 

   

by William Lyon Homes, before the adoption of the merger agreement by William Lyon Homes stockholders, in order to enter into a binding agreement providing for a Superior Company Proposal, in accordance with the terms and provisions of the merger agreement.

For more information, seeThe Merger Agreement—Termination of the Merger Agreement” beginning on page 129 of this joint proxy statement/prospectus.

Fees and Expenses and Termination Fees (See page 130)

The merger agreement provides that, in connection with the termination of the merger agreement under specified circumstances, William Lyon Homes may be required to pay to Taylor Morrison a termination fee equal to $18.0 million cash. In addition, if the merger agreement is terminated by either of William Lyon Homes or Taylor Morrison because the requisite approval of William Lyon Homes’ stockholders is not obtained, then William Lyon Homes will be required to reimburse Taylor Morrison for all reasonable out-of-pocket fees and expenses incurred in connection with the negotiation of the merger agreement or the consummation of any of the transactions contemplated by the merger agreement, for an amount not to exceed $9.0 million in cash.

The merger agreement also provides that, in connection with the termination of the merger agreement under specified circumstances, Taylor Morrison may be required to pay to William Lyon Homes a termination fee equal to $40.0 million in cash. In addition, if the merger agreement is terminated by either of William Lyon Homes or Taylor Morrison because the requisite approval of Taylor Morrison’s stockholders is not obtained, then Taylor Morrison will be required to reimburse William Lyon Homes for all reasonable out-of-pocket fees and expenses incurred in connection with the negotiation of the merger agreement or the consummation of any of the transactions contemplated by the merger agreement, for an amount not to exceed $15.0 million in cash.



 

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For more information, seeThe Merger Agreement—Fees and Expenses and Termination Fees” beginning on page 130 of this joint proxy statement/prospectus.

Listing of Shares of Taylor Morrison common stock and Delisting and Deregistration of William Lyon Homes Class A common stock (See page 110)

Under the terms of the merger agreement, Taylor Morrison is required to use reasonable best efforts to cause the shares of Taylor Morrison common stock to be issued in connection with the merger to be approved for listing on the NYSE, prior to the closing of the merger. Accordingly, application will be made to have such shares approved for listing on the NYSE, where shares of Taylor Morrison common stock are currently listed for trading under the ticker symbol “TMHC.”

If the merger is completed, there will no longer be any publicly held shares of William Lyon Homes Class A common stock. Accordingly, William Lyon Homes Class A common stock will no longer be listed on the NYSE and will be deregistered under the Exchange Act.

Comparison of Stockholder Rights (See page 160)

William Lyon Homes stockholders will have different rights once they become Taylor Morrison stockholders due to differences between the organizational documents of William Lyon Homes and Taylor Morrison. SeeComparison of Rights of Taylor Morrison Stockholders and William Lyon Homes Stockholders” beginning on page 160 of this joint proxy statement/prospectus.

Appraisal Rights (See page 167)

Pursuant to Section 262 of the DGCL, William Lyon Homes stockholders who do not vote in favor of adoption of the merger agreement, who continuously hold their shares of William Lyon Homes common stock through the effective date of the merger and who otherwise comply with the applicable requirements of Section 262 of the DGCL have the right to seek appraisal of the fair value of their shares of William Lyon Homes common stock, as determined by the Delaware Court of Chancery, together with interest, if any, on the amount determined to be the fair value, if the merger is completed. The “fair value” of shares of William Lyon Homes common stock as determined by the Delaware Court of Chancery could be greater than, the same as, or less than the value of the Merger Consideration that William Lyon Homes stockholders would otherwise be entitled to receive under the terms of the merger agreement.

The right to seek appraisal will be lost if a William Lyon Homes stockholder votes FOR adoption of the merger agreement. However, abstaining or voting against adoption of the merger agreement is not in itself sufficient to perfect appraisal rights because additional actions must also be taken to perfect such rights.

William Lyon Homes stockholders who wish to exercise the right to seek an appraisal of their shares must so advise William Lyon Homes by delivering a written demand for appraisal prior to the taking of the vote on the merger agreement at the William Lyon Homes special meeting, and must otherwise follow the procedures prescribed by Section 262 of the DGCL. A person having a beneficial interest in shares of William Lyon Homes common stock held of record in the name of another person, such as a nominee or intermediary, must act promptly to cause the record holder to follow the steps required by Section 262 of the DGCL and in a timely manner to perfect appraisal rights. In view of the complexity of Section 262 of the DGCL, William Lyon Homes stockholders that may wish to pursue appraisal rights are urged to consult their legal and financial advisors. In addition, assuming the shares of William Lyon Homes Class A common stock remain listed on a national securities exchange immediately prior to the effective time, under Section 262 of the DGCL, the Delaware Court of Chancery will dismiss any appraisal proceedings as to all holders of William Lyon Homes Class A common



 

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stock who have perfected their appraisal rights unless (i) the total number of such shares entitled to appraisal exceeds 1% of the outstanding shares of William Lyon Homes Class A common stock, or (ii) the value of the Merger Consideration provided in the merger agreement for the total number of shares of William Lyon Homes Class A common stock entitled to appraisal exceeds $1 million. Under Section 262 of the DGCL, no similar condition to the availability of appraisal rights applies to the William Lyon Homes Class B common stock because such shares are not expected to be listed on a national securities exchange immediately prior to the effective time of the merger. However, pursuant to the voting agreement, the sole holder of all outstanding shares of William Lyon Homes Class B common stock has agreed not to exercise his appraisal rights. SeeAppraisal Rights” beginning on page 167 of this joint proxy statement/prospectus.

Holders of shares of Taylor Morrison common stock will not be entitled to rights of appraisal in connection with the merger.



 

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Summary Historical Consolidated Financial Data

Summary Consolidated Historical Financial Data of Taylor Morrison

The following selected historical information is being provided to assist you in your analysis of the financial aspects of the transaction. The Taylor Morrison annual historical information is derived from the audited consolidated financial statements of Taylor Morrison as of and for each of the fiscal years in the five-year period ended December 31, 2018. The Taylor Morrison data as of and for the nine months ended September 30, 2019 and September 30, 2018 has been derived from the unaudited interim financial statements of Taylor Morrison and, in the opinion of Taylor Morrison’s management, includes all normal and recurring adjustments that are considered necessary for the fair presentation of the results for those interim periods.

The information is only a summary and should be read in conjunction with Taylor Morrison’s historical consolidated financial statements and related notes contained in Taylor Morrison’s Annual Reports on Form 10-K for the year ended December 31, 2018 and Quarterly Reports on Form 10-Q for the quarter ended September 30, 2019, which are incorporated by reference into this joint proxy statement/prospectus, as well as other information that has been filed with the SEC. For information on where you can obtain copies of this information, see the section entitled “Where You Can Find More Information” beginning on page 178 of this joint proxy statement/prospectus. The historical results included below and elsewhere in this joint proxy statement/prospectus or incorporated by reference herein are not necessarily indicative of the future performance of Taylor Morrison, William Lyon Homes or the combined company after the transaction.

Summary of Operations Data of Taylor Morrison

 

    Nine Months Ended     Fiscal Year Ended  
    September 30,
2019
    September 30,
2018
    December 31,
2018
    December 31,
2017
    December 31,
2016
    December 31,
2015
    December 31,
2014
 
(in thousands, except per share
data)
                                         

Home closings revenue, net

  $ 3,205,252     $ 2,703,692     $ 4,115,216     $ 3,799,061     $ 3,425,521     $ 2,889,968     $ 2,619,558  

Land closings revenue

    14,391       18,335       39,901       17,093       64,553       43,770       53,381  

Financial services revenue

    62,117       47,513       67,758       69,136       59,955       43,082       35,493  

Amenity and other revenue

    13,863       —         4,518       —         —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

    3,295,623       2,769,540       4,227,393       3,885,290       3,550,029       2,976,820       2,708,432  

Cost of home closings

    2,619,968       2,202,377       3,410,853       3,092,704       2,801,739       2,358,823       2,082,819  

Cost of land closings

    9,418       14,704       33,458       12,005       35,912       24,546       39,696  

Financial services expenses

    36,595       31,647       41,469       41,652       32,099       25,536       19,671  

Amenity and other expenses

    12,754       —         3,420       —         —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenue

    2,678,735       2,248,728       3,489,200       3,146,361       2,869,750       2,408,905       2,142,186  

Gross margin

    616,888       520,812       738,193       738,929       680,279       567,915       566,246  

Sales, commissions and other marketing costs

    226,809       185,806       278,455       259,663       239,556       198,676       168,897  

General and administrative expenses

    120,990       101,795       138,488       130,777       122,207       95,235       81,153  

Equity in income of unconsolidated entities

    (7,983     (9,777     (13,332     (8,846     (7,453     (1,759     (5,405

Interest (income)/expense, net

    (2,250     (1,289     (1,639     (577     (184     (192     1,160  

Other expense/(income), net

    (1,492     4,889       11,816       2,256       11,947       11,634       18,447  

Transaction and corporate reorganization expenses

    6,496       —         50,889       —         —         —         —    

Loss on extinguishment of debt

    5,806       —         —         —         —         33,317       —    

Gain on foreign currency forward

    —         —         —         —         —         (29,983     —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


 

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    Nine Months Ended     Fiscal Year Ended  
    September 30,
2019
    September 30,
2018
    December 31,
2018
    December 31,
2017
    December 31,
2016
    December 31,
2015
    December 31,
2014
 
(in thousands, except per share
data)
                                         

Income before income taxes

    268,512       239,388       273,516       355,656       314,206       260,987       301,994  

Income tax provision

    68,307       38,123       63,036       179,006       107,643       90,001       76,395  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income before allocation to non-controlling interests

    200,205       201,265       210,480       176,650       206,563       229,045       267,501  

Net income attributable to non-controlling interests—joint ventures

    (211     (428     (533     (430     (1,294     (1,681     (1,648
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income before principal equityholders non-controlling interests

    199,994       200,837       209,947       176,220       205,269       227,364       265,853  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to principal equityholders non-controlling interests

    —         (4,391     (3,583     (85,000     (152,653     (166,315     (194,384
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income available to Taylor Morrison Home Corporation

  $ 199,994     $ 196,446     $ 206,364     $ 91,220     $ 52,616     $ 61,049     $ 71,469  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per common share:

             

Basic

  $ 1.86     $ 1.75     $ 1.85     $ 1.47     $ 1.69     $ 1.85     $ 2.17  

Diluted

  $ 1.84     $ 1.73     $ 1.83     $ 1.47     $ 1.69     $ 1.85     $ 2.17  

Weighted average number of shares of common stock:

             

Basic

    107,389       112,449       111,743       62,061       31,084       33,063       32,937  

Diluted

    108,599       116,378       115,119       120,915       120,832       122,384       122,313  

Balance Sheet Data of Taylor Morrison

 

    As of  
    September 30,
2019
    September 30,
2018
    December 31,
2018
    December 31,
2017
    December 31,
2016
    December 31,
2015
    December 31,
2014
 
(in thousands)                                          

Cash and cash equivalents(1)

  $ 222,049     $ 382,054     $ 329,645     $ 573,925     $ 300,179     $ 126,188     $ 234,217  

Real estate inventory

    4,253,674       3,269,111       3,980,565       2,959,236       3,017,219       3,126,787       2,518,321  

Total assets

    5,339,860       4,331,693       5,264,441       4,325,893       4,220,926       4,122,447       4,111,798  

Total debt, net

    2,853,882       1,972,483       2,209,596       1,498,062       1,586,533       1,668,425       1,715,791  

Total stockholders’ equity

    2,485,978       2,359,210       2,418,735       2,346,545       2,160,202       1,972,677       1,777,161  

 

(1)

Excludes restricted cash.



 

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Summary Consolidated Historical Financial Data of William Lyon Homes

The following table presents certain of William Lyon Homes’ historical financial and other data. The selected historical consolidated statement of operations data for each of the years in the five-year period ended December 31, 2018, and the balance sheet data as of December 31, 2018, 2017, 2016, 2015 and 2014, are derived from William Lyon Homes’ audited consolidated financial statements and accompanying notes for such years and should be read in conjunction with such audited consolidated financial statements of William Lyon Homes. The selected historical consolidated statement of operations data for the nine months ended September 30, 2019 and 2018, and the balance sheet data as of September 30, 2019 and 2018, are derived from William Lyon Homes’ unaudited condensed consolidated financial statements and accompanying notes, and should be read in conjunction with such unaudited condensed consolidated financial statements of William Lyon Homes.

The information is only a summary and should be read in conjunction with William Lyon Homes’ historical consolidated financial statements and related notes contained in William Lyon Homes’ Annual Reports on Form 10-K for the year ended December 31, 2018 and Quarterly Reports on Form 10-Q for the quarter ended September 30, 2019, which are incorporated by reference into this joint proxy statement/prospectus, as well as other information that has been filed with the SEC. For information on where you can obtain copies of this information, see the section entitled “Where You Can Find More Information” beginning on page 178 of this joint proxy statement/prospectus. The historical results included below and elsewhere in this joint proxy statement/prospectus or incorporated by reference herein are not necessarily indicative of the future performance of Taylor Morrison, William Lyon Homes or the combined company after the transaction.

 

    Nine Months Ended     Fiscal Year Ended  
    September 30,
2019
    September 30,
2018
    December 31,
2018
    December 31,
2017
    December 31,
2016
    December 31,
2015
    December 31,
2014
 
(in thousands, except number of
shares and per share data)
                                         

Operating revenue

             

Home sales

  $ 1,382,057     $ 1,424,331     $ 2,081,721     $ 1,795,074     $ 1,402,203     $ 1,078,928     $ 857,025  

Construction services

    6,165       3,193       5,450       1,454       3,837       25,124       37,728  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    1,388,222       1,427,524       2,087,171       1,796,528       1,406,040       1,104,052       894,753  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating costs

             

Cost of sales—homes

    (1,165,185     (1,169,191     (1,703,298     (1,478,549     (1,162,337     (878,995     (677,531

Construction services

    (5,732     (3,063     (5,146     (1,317     (3,485     (21,181     (30,700

Sales and marketing

    (75,887     (80,420     (114,495     (86,226     (72,509     (61,539     (45,903

General and administrative

    (88,890     (83,067     (119,272     (90,206     (73,398     (59,161     (54,626

Transaction expenses

    —         (3,907     (3,907     —         —         —         (5,832

Amortization of intangible assets

    —         —         —         —         —         (957     (1,814

Other

    (1,639     (1,510     (2,148     (2,274     (343     (1,972     (2,874
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    (1,337,333     (1,341,158     (1,948,266     (1,658,572     (1,312,072     (1,023,805     (819,280
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

    50,889       86,366       138,905       137,956       93,968       80,247       75,473  

Financial services

             

Equity in income of unconsolidated joint ventures

    2,643       1,996       —         —         —         —         —    

Income from financial services operations

    2,168       —         —         —         —         —         —    

Transaction expenses

    (990     —         —         —         —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Financial services income

    3,821       1,996       —         —         —         —         —    

Equity in income of unconsolidated joint ventures

    —         —         3,118       3,661       5,606       3,239       555  

Other income, net

    7,345       2,856       2,715       895       3,243       3,581       2,295  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


 

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    Nine Months Ended     Fiscal Year Ended  
    September 30,
2019
    September 30,
2018
    December 31,
2018
    December 31,
2017
    December 31,
2016
    December 31,
2015
    December 31,
2014
 
(in thousands, except number of
shares and per share data)
                                         

Income before extinguishment of debt

    62,055       91,218       144,738       142,512       102,817       87,067       78,323  

Gain (Loss) on extinguishment of debt, net

    (1,433     —         1,015       (21,828     —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before provision for income taxes

    60,622       91,218       145,753       120,684       102,817       87,067       78,323  

Provision for income taxes

    (13,548     (19,580     (30,620     (62,933     (34,850     (26,806     (23,797
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

    47,074       71,638       115,133       57,751       67,967       60,261       54,526  

Less: Net income attributable to noncontrolling interests

    (19,024     (14,297     (23,537     (9,616     (8,271     (2,925     (9,901
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income available to common stockholders

    28,050       57,341       91,596       48,135       59,696       57,336       44,625  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income per common share:

             

Basic

  $ 0.74     $ 1.51     $ 2.42     $ 1.30     $ 1.62     $ 1.57     $ 1.41  

Diluted

  $ 0.72     $ 1.45     $ 2.32     $ 1.24     $ 1.55     $ 1.48     $ 1.34  

Weighted average common shares outstanding:

             

Basic

    37,755,879       37,931,764       37,832,073       37,040,137       36,764,799       36,546,227       31,753,110  

Diluted

    38,944,008       39,581,986       39,419,059       38,663,667       38,474,900       38,767,556       33,236,343  

Balance Sheet Data of William Lyon Homes

 

    As of  
    September 30,
2019
    September 30,
2018
    December 31,
2018
    December 31,
2017
    December 31,
2016
    December 31,
2015
    December 31,
2014
 
(in thousands)                                          

Cash and cash equivalents

  $ 42,118     $ 50,782     $ 33,779     $ 182,710     $ 42,612     $ 50,203     $ 52,771  

Real estate inventories—Owned

    2,327,582       2,437,450       2,333,207       1,699,850       1,771,998       1,675,106       1,404,639  

Real estate inventories—Not owned

    215,541       209,819       315,576       —         —         —         —    

Total assets

    3,019,004       2,944,048       2,929,774       2,061,104       2,011,280       1,923,450       1,659,724  

Total debt

    1,407,191       1,516,249       1,321,345       1,030,184       1,080,650       1,105,776       925,398  

Total William Lyon Homes stockholders’ equity

    895,965       829,218       863,322       780,472       697,086       632,095       569,915  

Noncontrolling interests

    136,398       168,609       151,005       80,158       66,343       39,374       27,231  


 

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Selected Unaudited Pro Forma Condensed Combined Financial Information of Taylor Morrison and William Lyon Homes

The following selected unaudited pro forma condensed combined financial data (the “selected pro forma data”) is presented to illustrate the estimated effects of the pending merger of Taylor Morrison and William Lyon Homes, as further described in the notes to the unaudited pro forma condensed combined financial information appearing elsewhere in this joint proxy statement/prospectus. The merger will be accounted for as a purchase with Taylor Morrison considered to be acquiring William Lyon Homes in the merger for accounting purposes. The selected pro forma data has been prepared using the acquisition method of accounting in accordance with ASC 805, under which the assets and liabilities of William Lyon Homes will be recorded by Taylor Morrison at their respective fair values as of the date the merger is consummated. The selected unaudited pro forma condensed combined balance sheet data gives effect to the merger as if it had occurred on September 30, 2019. The selected unaudited pro forma condensed combined statement of operations data for the twelve months ended December 31, 2018 and for the nine months ended September 30, 2019, gives effect to the merger as if it had occurred on January 1, 2018. The following unaudited pro forma statement of operations data also gives effect to the acquisition by Taylor Morrison of AV Homes in October 2018, as if it had occurred on January 1, 2018.

The selected pro forma data, which is preliminary in nature, has been derived from, and should be read in conjunction with, the more detailed unaudited pro forma condensed combined financial information of the combined company appearing elsewhere in this joint proxy statement/prospectus and the accompanying notes to the unaudited pro forma condensed combined financial information. In addition, the unaudited pro forma condensed combined financial information was based on, and should be read in conjunction with, the historical consolidated financial statements and related notes of each of Taylor Morrison and William Lyon Homes, which are incorporated in this joint proxy statement/prospectus by reference. For more information, seeWhere You Can Find More Information” and “Unaudited Pro Forma Condensed Combined Financial Statements” beginning on pages 178 and 140, respectively, of this joint proxy statement/prospectus.

The selected pro forma data has been presented in accordance with SEC Regulation S-X Article 11 for illustrative purposes only and is not necessarily indicative of what the combined company’s financial position or results of operations actually would have been had the merger been consummated as of the dates indicated. In addition, the selected pro forma data does not purport to project the future financial position or operating results of the combined company. Also, as explained in more detail in the accompanying notes to the unaudited pro forma condensed combined financial information, the preliminary fair values of assets acquired and liabilities assumed and other pro forma adjustments reflected in the selected pro forma data are subject to adjustment and may vary materially from the fair values that will be recorded upon consummation of the merger, and these differences could have a material impact on the accompanying unaudited condensed combined pro forma financial information and the combined company’s future results of operations and financial position.

 

     For the Twelve
Months Ended
December 31, 2018
     For the Nine Months
Ended September 30,
2019
 

(in thousands, except per share data)

     

Pro Forma Combined Statement of Operations Data

     

Total Revenues

   $ 6,881,398      $ 4,743,069  

Income before income taxes

     423,781        332,186  

Income tax expense

     95,563        82,618  

Net Income Available to Taylor Morrison/ William Lyon Homes

     298,547        230,333  

Basic earnings per share

   $ 2.08      $ 1.65  

Diluted earnings per share

     2.05        1.62  


 

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     As of September 30, 2019  

Pro Forma Combined Balance Sheet Data

  

Property and equipment and other assets, net

   $ 308,316  

Goodwill

     427,134  

Total assets

     8,325,827  

Total debt

     3,684,447  

Stockholders’ equity

     3,317,304  


 

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Unaudited Comparative Per Share Data

The following table sets forth selected per share information for Taylor Morrison common stock and William Lyon Homes Class A common stock on a historical and unaudited pro forma combined basis for the nine months ended September 30, 2019, and for the year ended December 31, 2018.

This information should be read together with the consolidated financial statements and related notes of Taylor Morrison and William Lyon Homes and with the “Unaudited Pro Forma Condensed Combined Financial Statements”. The pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the merger had been completed as of the beginning of the periods presented, nor is it necessarily indicative of the future operating results or financial position of the combined company.

The historical book value per share is computed by dividing total stockholders’ equity by the number of shares of common stock outstanding at the end of the period. The pro forma income per share of the combined company is computed by dividing the pro forma income by the pro forma weighted average number of shares outstanding. The pro forma book value per share of the combined company is computed by dividing total pro forma stockholders’ equity by the pro forma number of shares of common stock outstanding at the end of the period. The William Lyon Homes pro forma equivalent per common share amounts were calculated by multiplying the Taylor Morrison pro forma combined per share information by 0.800, the exchange ratio.

 

     Taylor Morrison      William Lyon Homes  
     Historical      Pro
Forma
Combined
     Historical      Pro Forma
Equivalent
 

Basis (loss) income per common share:

           

Nine months ended September 30, 2019

   $ 1.86      $ 1.66      $ 0.74      $ 1.33  

Year ended December 31, 2018

   $ 1.85      $ 2.08      $ 2.42      $ 1.66  

Diluted (loss) income per common share:

           

Nine months ended September 30, 2019

   $ 1.84      $ 1.63      $ 0.72      $ 1.30  

Year ended December 31, 2018

   $ 1.83      $ 2.05      $ 2.32      $ 1.64  

Cash dividends declared per common share:

           

Nine months ended September 30, 2019

   $ 0.00      $ —        $ 0.00      $ —    

Year ended December 31, 2018

   $ 0.00      $ —        $ 0.00      $ —    

Book value per common share:

           

As of September 30, 2019

   $ 23.49      $ 24.06      $ 23.67      $ 19.25  

Year ended December 31, 2018

   $ 21.41        N/A      $ 23.02        N/A  


 

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RISK FACTORS

In addition to the other information contained in or incorporated by reference into this joint proxy statement/prospectus, including the matters addressed in the section entitled “Special Note Regarding Forward-Looking Statements” beginning on page 36 of this joint proxy statement/prospectus, Taylor Morrison stockholders should carefully consider the following risks before deciding whether to vote to approve the Taylor Morrison proposals, and William Lyon Homes stockholders should carefully consider the following risk factors before deciding whether to vote to approve the William Lyon Homes proposals. In addition, you should read and consider the risks associated with each of the businesses of Taylor Morrison and William Lyon Homes because these risks will relate to the combined company following the completion of the merger. Descriptions of some of these risks can be found in the respective Annual Reports of Taylor Morrison and William Lyon Homes on Form 10-K for the fiscal year ended December 31, 2018, as such risks may be updated or supplemented in each company’s subsequently filed Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, which are incorporated by reference into this joint proxy statement/prospectus. Taylor Morrison and William Lyon Homes urge you to carefully read this entire joint proxy statement/prospectus and its annexes and the other documents incorporated by reference into this joint proxy statement/prospectus. See also the section entitled “Where You Can Find More Information” beginning on page 178 of this joint proxy statement/prospectus.

Risks Relating to the Merger

The merger is subject to approval by the stockholders of William Lyon Homes.

In order for the merger to be completed, William Lyon Homes stockholders must approve the merger, which requires the affirmative vote of holders of a majority in voting power of the outstanding shares of William Lyon Homes common stock entitled to vote thereon. There can be no assurance that this approval will be obtained.

The merger is subject to approval of the Share Issuance by the stockholders of Taylor Morrison.

In order for the merger to be completed, Taylor Morrison stockholders must approve the Share Issuance, which requires the affirmative vote of holders of a majority in voting power of Taylor Morrison common stock present in person or represented by proxy at the Taylor Morrison Special Meeting and entitled to vote thereon. There can be no assurance that this approval will be obtained.

Taylor Morrison’s stock price may be negatively impacted by risks, conditions and developments that apply to Taylor Morrison, which are different from the risks, conditions and developments applicable to William Lyon Homes.

Upon completion of the merger, William Lyon Homes stockholders will become holders of Taylor Morrison common stock. The businesses and markets of Taylor Morrison are different from those of William Lyon Homes. There is a risk that various factors, conditions and developments that would not affect the price of William Lyon Homes Class A common stock could negatively affect the price of Taylor Morrison common stock.

Taylor Morrison and William Lyon Homes may have difficulty attracting, motivating and retaining executives and other employees in light of the merger.

Uncertainty about the effect of the merger on Taylor Morrison and William Lyon Homes employees may have an adverse effect on Taylor Morrison and William Lyon Homes and consequently the combined company. This uncertainty may impair Taylor Morrison’s and William Lyon Homes’ ability to attract, retain and motivate personnel both before and after completion of the merger. Taylor Morrison and William Lyon Homes are dependent on the experience and industry knowledge of their officers and other key employees to execute their business plans. The combined company’s success after the merger will depend in part upon its ability to retain key management personnel and other key employees of Taylor Morrison and William Lyon Homes. Employee

 

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retention and maintaining employee productivity may be particularly challenging during the pendency of the merger, as employees may feel uncertain about their future roles with the combined company. In addition, Taylor Morrison and William Lyon Homes may have to provide additional compensation in order to retain employees. If employees of Taylor Morrison or William Lyon Homes depart because of issues relating to the uncertainty and difficulty of integration or a desire not to become employees of the combined company, the combined company’s ability to realize the anticipated benefits of the merger could be reduced.

Taylor Morrison and William Lyon Homes will incur significant transaction-related costs in connection with the merger.

Taylor Morrison and William Lyon Homes expect to incur a number of non-recurring transaction-related costs associated with completing the merger, combining the operations of the two companies and achieving desired synergies. These fees and costs will be significant. Non-recurring transaction costs include, but are not limited to, fees paid to legal, financial and accounting advisors, filing fees and printing costs. Additional unanticipated costs may be incurred in the integration of the businesses of Taylor Morrison and William Lyon Homes. There can be no assurance that the elimination of certain duplicative costs, as well as the realization of other efficiencies related to the integration of the two businesses, will offset the incremental transaction-related costs over time. Thus, any net benefit may not be achieved in the near term, the long term or at all.

Failure to successfully combine the businesses of Taylor Morrison and William Lyon Homes in the expected time frame may adversely affect the future results of the combined company, and, consequently, the value of any Taylor Morrison common stock that William Lyon Homes stockholders receive as part of the Merger Consideration.

The success of the merger will depend, in part, on the ability of Taylor Morrison to realize the anticipated benefits and synergies from combining the businesses of Taylor Morrison and William Lyon Homes. To realize these anticipated benefits, the businesses must be successfully combined. If the combined company is not able to achieve these objectives, or is not able to achieve these objectives on a timely basis, the anticipated benefits of the transactions may not be realized fully or at all. In addition, the actual integration may result in additional and unforeseen expenses, which could reduce the anticipated benefits of the transactions. These integration difficulties could result in declines in the market value of Taylor Morrison common stock and, consequently, result in declines in the market value of the Taylor Morrison common stock that William Lyon Homes stockholders receive as part of the Merger Consideration and continue to hold following consummation of the merger.

The merger is subject to conditions, including certain conditions that may not be satisfied, and may not be completed on a timely basis, or at all. Failure to complete the merger could have material and adverse effects on William Lyon Homes and Taylor Morrison.

The completion of the merger is subject to a number of conditions, including the approval of the merger by the William Lyon Homes stockholders and approval of the Share Issuance by the Taylor Morrison stockholders, the absence of any law or order prohibiting the merger, the effectiveness of the Form S-4, the approval for listing on the NYSE of the shares of Taylor Morrison common stock to be issued pursuant to the Merger, the absence of a material adverse effect on Taylor Morrison or William Lyon Homes and certain other customary conditions relating to Taylor Morrison’s and William Lyon Homes’ representations and warranties in the merger agreement and the performance of their respective obligations, which make the completion and timing of the completion of the merger uncertain. For more information relating to conditions to completion of the merger, see the section entitled “The Merger Agreement—Conditions to Completion of the Merger” beginning on page 127 of this joint proxy statement/prospectus. Also, either William Lyon Homes or Taylor Morrison may terminate the merger agreement if the merger has not been completed by May 5, 2020, unless the failure of the merger to be completed by such date has resulted from the failure of the party seeking to terminate the merger agreement to perform its obligations.

 

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If the merger is not completed on a timely basis, or at all, Taylor Morrison’s and William Lyon Homes’ respective ongoing businesses may be adversely affected and, without realizing any of the benefits of having completed the merger, Taylor Morrison and William Lyon Homes will be subject to a number of risks, including the following:

 

   

William Lyon Homes may be required to pay Taylor Morrison an $18.0 million termination fee if the merger agreement is terminated under qualifying circumstances, as described in the merger agreement;

 

   

Taylor Morrison may be required to pay William Lyon Homes a $40.0 million termination fee if the merger agreement is terminated under qualifying circumstances, as described in the merger agreement;

 

   

William Lyon Homes may be required to reimburse Taylor Morrison for its reasonable, out-of-pocket fees and expenses incurred in connection with the negotiation of the merger agreement or the consummation of any of the transactions contemplated by the merger agreement in an amount up to $9.0 million if the merger agreement is terminated because the requisite approval of William Lyon Homes’ stockholders is not obtained;

 

   

Taylor Morrison may be required to reimburse William Lyon Homes for its reasonable, out-of-pocket fees and expenses incurred in connection with the negotiation of the merger agreement or the consummation of any of the transactions contemplated by the merger agreement in an amount up to $15.0 million if the merger agreement is terminated because the requisite approval of Taylor Morrison’s stockholders is not obtained;

 

   

Taylor Morrison and William Lyon Homes may be required to pay significant costs relating to the merger, whether or not the merger is completed, such as legal, accounting, financial advisor and printing fees;

 

   

under the merger agreement, each of Taylor Morrison and William Lyon Homes is subject to certain restrictions on the conduct of its business prior to completing the merger, which may adversely affect its ability to execute certain of its business strategies;

 

   

time and resources committed by Taylor Morrison’s and William Lyon Homes’ respective management to matters relating to the merger could otherwise have been devoted to pursuing other beneficial opportunities;

 

   

the market price of Taylor Morrison common stock or William Lyon Homes Class A common stock could decline below current market prices to the extent that such current market prices reflect a market assumption that the merger will be completed; and

 

   

if the merger agreement is terminated and the William Lyon Homes Board seeks another business combination, stockholders of William Lyon Homes cannot be certain that William Lyon Homes will be able to find a party willing to enter into a business combination or other strategic transaction on terms equivalent to or more attractive than the terms that Taylor Morrison has agreed to in the merger agreement.

In addition, if the merger is not completed, Taylor Morrison and/or William Lyon Homes may experience negative reactions from the financial markets and from their respective customers and employees. Taylor Morrison and/or William Lyon Homes could also be subject to litigation related to any failure to complete the merger or to enforcement proceedings commenced against Taylor Morrison or William Lyon Homes to perform their respective obligations under the merger agreement. If the merger is not completed, Taylor Morrison and William Lyon Homes cannot assure their respective stockholders that the risks described above will not materialize and will not adversely affect the business, financial results and stock prices of Taylor Morrison and/or William Lyon Homes.

 

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The merger agreement contains provisions that limit both William Lyon Homes’ and Taylor Morrison’s ability to pursue alternatives to the merger, could discourage a potential competing acquirer of either William Lyon Homes or Taylor Morrison from making a favorable alternative transaction proposal and, in specified circumstances, could require William Lyon Homes to pay a termination fee of $18.0 million to Taylor Morrison or Taylor Morrison to pay a termination fee of $40.0 million to William Lyon Homes.

Under the merger agreement, both William Lyon Homes and Taylor Morrison are restricted from entering into alternative transactions. Subject to specified exceptions (which are discussed in more detail in “The Merger Agreement—Termination of the Merger Agreement” beginning on page 129 of this joint proxy statement/prospectus), William Lyon Homes and Taylor Morrison are restricted from initiating, soliciting, knowingly facilitating or knowingly encouraging a competing acquisition proposal with any person. Additionally, under the merger agreement, in the event of a potential change by the William Lyon Homes Board or Taylor Morrison Board, as applicable, of its recommendation with respect to the merger (in the case of the William Lyon Homes Board) or the Share Issuance (in the case of the Taylor Morrison Board) in light of a Superior Proposal, William Lyon Homes or Taylor Morrison, as applicable, must provide the other company with four business days’ prior written notice to allow the other company to propose an adjustment to the terms and conditions of the merger agreement. William Lyon Homes may terminate the merger agreement and enter into an agreement with respect to a Superior Proposal only if specified conditions have been satisfied, including compliance with the no solicitation and termination provisions of the merger agreement.

These provisions could discourage a third party that may have an interest in acquiring all or a significant part of either William Lyon Homes or Taylor Morrison from considering or proposing that acquisition, in the case of William Lyon Homes, even if such third party were prepared to pay consideration with a higher per share cash or market value than the market value proposed to be received or realized in the merger. These provisions also might result in a potential competing acquirer of either company proposing to pay a lower price than it would otherwise have proposed to pay because of the added expense of the termination fee that may become payable in specified circumstances.

Under the merger agreement, William Lyon Homes may be required to pay to Taylor Morrison a termination fee of $18.0 million if the merger agreement is terminated under specified circumstances, and Taylor Morrison may be required to pay to William Lyon Homes a termination fee of $40.0 million if the merger agreement is terminated under specified circumstances. If either termination fee becomes payable, the payment of this fee could have material and adverse consequences to the financial condition and operations of the company required to pay such termination fee. For a discussion of the restrictions on William Lyon Homes and Taylor Morrison soliciting or entering into an acquisition proposal or alternative transaction and the William Lyon Homes Board’s and Taylor Morrison Board’s ability to change its recommendation, seeThe Merger Agreement—No Solicitation of Alternative Proposals, The Merger—Recommendation of the William Lyon Homes Board,” and “The Merger—Recommendation of the Taylor Morrison Board” beginning on pages 120, 72 and 69, respectively, of this joint proxy statement/prospectus.

William Lyon Homes’ executive officers and directors and Taylor Morrison’s executive officers and directors have interests in the merger that may be different from, or in addition to, the interests of William Lyon Homes’ stockholders and Taylor Morrison’s stockholders generally.

Executive officers of William Lyon Homes and Taylor Morrison negotiated the terms of the merger agreement. The William Lyon Homes Board determined that entering into the merger agreement was advisable, fair to and in the best interests of William Lyon Homes and its stockholders, and approved, adopted, and declared advisable the merger agreement and the transactions contemplated thereby and recommended that William Lyon Homes stockholders approve the merger agreement. The Taylor Morrison Board determined that entering into the merger agreement was advisable, fair to and in the best interests of Taylor Morrison and its stockholders, and approved, adopted, and declared advisable the merger agreement and the transactions contemplated thereby (including the Share Issuance) and recommended that Taylor Morrison stockholders approve the Share Issuance.

 

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In considering these facts and the other information contained in this joint proxy statement/prospectus, you should be aware that aside from their interests as stockholders, William Lyon Homes’ executive officers and directors and Taylor Morrison’s executive officers and directors may have employment and other compensation arrangements or plans that give them financial interests in the merger that may be different from, or in addition to, the interests of William Lyon Homes stockholders or Taylor Morrison stockholders. For a further description of these interests see the sections entitled “The Merger—Interests of Certain William Lyon Homes Directors and Officers in the Merger” and “The Merger—Interests of Certain Taylor Morrison Directors and Officers in the Merger.

The fairness opinion rendered to the William Lyon Homes Board by its financial advisor, J.P. Morgan, was based on the financial analysis J.P. Morgan performed, which considered factors such as market and other conditions then in effect, and financial forecasts and other information made available to it, as of the date of its opinion. As a result, the opinion does not reflect changes in events or circumstances after the date of such opinion. William Lyon Homes has not obtained, and does not expect to obtain, an updated fairness opinion from J.P Morgan reflecting changes in circumstances that may have occurred since the signing of the merger agreement.

The fairness opinion rendered to the William Lyon Homes Board by J.P. Morgan was provided in connection with, and at the time of, the William Lyon Homes Board’s evaluation of the merger. The opinion was based on the financial analyses performed, which considered market and other conditions then in effect, and financial forecasts and other information made available to J.P. Morgan as of the date of its opinion, which may have changed, or may change, after the date of such opinion. William Lyon Homes has not obtained an updated opinion as of the date of this joint proxy statement/prospectus from J.P. Morgan. William Lyon Homes does not expect to obtain an updated opinion prior to completion of the merger. Changes in the operations and prospects of Taylor Morrison or William Lyon Homes, general market and economic conditions and other factors which may be beyond the control of Taylor Morrison and William Lyon Homes, and on which the fairness opinion was based, may have altered the value of Taylor Morrison or William Lyon Homes or the prices of shares of Taylor Morrison common stock or shares of William Lyon Homes Class A common stock since the dates of such opinion, or may alter such values and prices by the time the merger is completed. The opinion does not speak as of any date other than the date of such opinion. For a description of the opinion that William Lyon Homes received from its financial advisor, see the section entitled “The Merger—Opinion of William Lyon Homes Financial Advisor, J.P. Morgan.

The fairness opinion rendered to the Taylor Morrison Board by its financial advisor, Citi, was based on the financial analysis Citi performed at the direction of the Taylor Morrison Board, which considered factors such as market and other conditions then in effect, and financial forecasts and other information made available to it, as of the date of its opinion. As a result, the opinion does not reflect changes in events or circumstances after the date of such opinion. Taylor Morrison has not obtained, and does not expect to obtain, an updated fairness opinion from Citi reflecting changes in circumstances that may have occurred since the signing of the merger agreement.

The fairness opinion rendered to the Taylor Morrison Board by Citi at the direction of the Taylor Morrison Board was provided in connection with, and at the time of, the Taylor Morison Board’s evaluation of the merger. The opinion was based on the financial analyses performed, which considered market and other conditions then in effect, and financial forecasts and other information made available to Citi as of the date of its opinion, which may have changed, or may change, after the date of such opinion. Taylor Morrison has not obtained an updated opinion as of the date of this joint proxy statement/prospectus from Citi. Taylor Morrison does not expect to obtain an updated opinion prior to completion of the merger. Changes in the operations and prospects of Taylor Morrison or William Lyon Homes, general market and economic conditions and other factors which may be beyond the control of Taylor Morrison and William Lyon Homes, and on which the fairness opinion was based, may have altered the value of Taylor Morrison or William Lyon Homes or the prices of shares of Taylor Morrison common stock or shares of William Lyon Homes Class A common stock since the dates of such

 

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opinion, or may alter such values and prices by the time the merger is completed. The opinion does not speak as of any date other than the date of such opinion. For a description of the opinion that Taylor Morrison received from its financial advisor, see the section entitled “The Merger—Opinion of Taylor Morrisons Financial Advisor, Citi” beginning on page 78 of this joint proxy statement/prospectus.

The closing of the merger may trigger change in control provisions in certain agreements to which William Lyon Homes is a party.

Closing of the merger may trigger change in control provisions in certain agreements to which William Lyon Homes is a party. See The Merger AgreementTreatment of William Lyon Homes Existing Indebtedness beginning on page 109 of this joint proxy statement/prospectus. If William Lyon Homes and Taylor Morrison are unable to negotiate waivers of those provisions, the counterparties may exercise their rights and remedies under the agreements, potentially terminating the agreements or seeking monetary damages. Even if William Lyon Homes and Taylor Morrison are able to negotiate waivers, the counterparties may require a fee for such waiver or seek to renegotiate the agreements on terms less favorable to William Lyon Homes or the combined company. See “—Changes in credit rating could adversely affect the combined company, including by decreasing the combined companys business flexibility, financial condition and operating results, as well as the market price of Taylor Morrison common stock.

William Lyon Homes is subject to business uncertainties and contractual restrictions while the merger is pending, which could adversely affect William Lyon Homes’ business and operations.

Under the terms of the merger agreement, William Lyon Homes is subject to certain restrictions on the conduct of its business prior to completing the merger, which may adversely affect its ability to execute certain of its business strategies, including the ability in certain cases to enter into contracts or incur capital expenditures to grow its business. Such limitations could negatively affect William Lyon Homes’ businesses and operations prior to the completion of the merger. Furthermore, the process of planning to integrate two businesses and organizations for the post-merger period can divert management attention and resources and could ultimately have an adverse effect on each of Taylor Morrison and William Lyon Homes.

In connection with the merger, it is possible that some customers, suppliers and other persons with whom William Lyon Homes has a business relationship may delay or defer certain business decisions or might decide to seek to terminate, change or renegotiate their relationships with William Lyon Homes as a result of the merger, which could negatively affect William Lyon Homes revenues, earnings and cash flows, as well as the market price of shares of its common stock, regardless of whether the merger is completed.

The exchange ratio is fixed and because the market price of Taylor Morrison common stock and William Lyon Homes Class A common stock will fluctuate, William Lyon Homes stockholders receiving Taylor Morrison common stock as part of the Merger Consideration cannot be sure of the market value of such Merger Consideration relative to the value of their shares of William Lyon Homes Class A common stock that they are exchanging.

If the merger is completed, each share of William Lyon Homes common stock will be converted into the right to receive $2.50 in cash (without any interest thereon) and 0.8000 shares of Taylor Morrison common stock (which is discussed in more detail in the section entitled “The Merger Agreement—Merger Consideration” beginning on page 112 of this joint proxy statement/prospectus). During the pendency of the merger, the market value of Taylor Morrison common stock will fluctuate. Decreases in the market value of Taylor Morrison common stock will negatively affect the value of the Merger Consideration that William Lyon Homes stockholders receive, and increases in the market value of Taylor Morrison common stock will increase the value of the Merger Consideration that Taylor Morrison is obligated to pay to William Lyon Homes stockholders in connection with the merger. The market value of William Lyon Homes Class A common stock will also fluctuate

 

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during the pendency of the merger, and increases in the market value of William Lyon Homes Class A common stock may mean that the Merger Consideration issued to William Lyon Homes stockholders will be worth less than the market value of the shares of William Lyon Homes common stock such stockholders are exchanging. The exchange ratio was fixed at the time the merger agreement was executed, and the value of Taylor Morrison and William Lyon Homes stock may vary significantly from their values on the date of the merger agreement, the date of this joint proxy statement/prospectus, the date on which William Lyon Homes stockholders vote on the merger agreement, and the date on which William Lyon Homes stockholders receive the Merger Consideration. Neither William Lyon Homes nor Taylor Morrison is permitted to terminate the merger agreement solely due to changes in the market price of either party’s common stock.

The unaudited pro forma financial information included in this joint proxy statement/prospectus may not necessarily reflect the combined company’s operating results and financial condition following the merger.

The unaudited pro forma condensed combined financial information included in this joint proxy statement/prospectus is derived from Taylor Morrison’s and William Lyon Homes’ separate historical consolidated financial statements. The preparation of this pro forma information is based upon available information and certain assumptions and estimates that Taylor Morrison and William Lyon Homes currently believe are reasonable. These assumptions and estimates may not prove to be accurate, and this pro forma financial information does not necessarily reflect what the combined company’s results of operations and financial position would have been had the merger been completed on the relevant dates assumed and the assumptions and estimates were to prove accurate, or what the combined company’s results of operations or financial position will be in the future.

William Lyon Homes’ and Taylor Morrison’s financial estimates are based on various assumptions that may not prove to be correct.

The financial estimates set forth in the forecasts included under “Certain Unaudited Projected Financial Information” are based on assumptions of, and information available to, William Lyon Homes and Taylor Morrison, as applicable, at the time they were prepared and provided to the applicable company’s board of directors and financial advisor, and were not prepared with a view toward public disclosure or toward compliance with published guidelines of any regulatory or professional body. William Lyon Homes and Taylor Morrison do not know whether the assumptions they made will prove correct. Any or all of such estimates may turn out to be wrong. They can be adversely affected by inaccurate assumptions or by known or unknown risks and uncertainties, many of which are beyond William Lyon Homes’ and Taylor Morrison’s control. Many factors mentioned in this joint proxy statement/prospectus and William Lyon Homes’ and Taylor Morrison’s other filings with the SEC incorporated by reference into this joint proxy statement/prospectus, including the risks outlined in this “Risk Factors” section and in William Lyon Homes’ and Taylor Morrison’s public filings and the events and/or circumstances described under “Special Note Regarding Forward-Looking Statements” will be important in determining William Lyon Homes’ and Taylor Morrison’s future results. See also,Where You Can Find More Information” beginning on page 178 of this joint proxy statement/prospectus. As a result of these contingencies, actual future results may vary materially from William Lyon Homes’ and Taylor Morrison’s estimates , which could have an adverse impact on the market price of Taylor Morrison common stock or the financial position of Taylor Morrison following the merger. SeeCertain Unaudited Projected Financial Information” for more information.

Current Taylor Morrison stockholders and William Lyon Homes stockholders will have a reduced ownership and voting interest in Taylor Morrison after the merger and will exercise less influence over management.

Upon the completion of the merger, each William Lyon Homes stockholder and each Taylor Morrison stockholder will have a percentage ownership of Taylor Morrison that is smaller than such stockholder’s previous percentage ownership of William Lyon Homes or Taylor Morrison, as applicable. Based on the number of issued and outstanding shares of Taylor Morrison common stock and William Lyon Homes common stock on

 

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November 5, 2019, the last full trading day before the announcement of the merger, and assuming no adjustment in the number of shares of Taylor Morrison common stock to be issued as Merger Consideration pursuant to the merger agreement, William Lyon Homes stockholders, as a group, will receive shares in the merger constituting approximately 23% of the Taylor Morrison common stock expected to be outstanding immediately after the merger (not including any Taylor Morrison common stock held by William Lyon Homes stockholders prior to the merger), and Taylor Morrison stockholders, as a group, will own 77% of Taylor Morrison common stock expected to be outstanding immediately after the merger. As a result of these reduced ownership percentages, each of Taylor Morrison and William Lyon Homes stockholders, as a group, will have less voting power in, and influence on the board of directors, management and policies of, Taylor Morrison following the merger than they now have in their respective companies.

The shares of Taylor Morrison common stock that may be received by William Lyon Homes stockholders as a result of the merger will have different rights from the shares of William Lyon Homes common stock.

Upon the completion of the merger, William Lyon Homes stockholders will become Taylor Morrison stockholders and their rights as stockholders will be governed by the Taylor Morrison Charter and the Taylor Morrison Bylaws, as well as Delaware law. The rights of Taylor Morrison stockholders differ from those of William Lyon Homes stockholders in important respects and, accordingly, the stockholders’ ability to benefit from the results of Taylor Morrison’s operations may be different from their pre-merger ability to benefit from the results of William Lyon Homes’ operations. See “Comparison of Rights of Taylor Morrison Stockholders and William Lyon Homes Stockholders” beginning on page 160 of this joint proxy statement/prospectus.

Potential litigation instituted against Taylor Morrison, William Lyon Homes or their respective directors or officers challenging the proposed merger may prevent the merger from becoming effective within the expected timeframe or at all.

Potential litigation related to the merger may result in injunctive or other relief prohibiting, delaying or otherwise adversely affecting the parties’ ability to complete the merger. Such relief may prevent the merger from becoming effective within the expected timeframe or at all. In addition, defending against such claims may be expensive and divert management’s attention and resources, which could adversely affect the respective businesses of Taylor Morrison and William Lyon Homes.

Risks Relating to the Combined Company Following the Merger

Taylor Morrison may have difficulty integrating the William Lyon Homes business, and the anticipated benefits of the combined company may not be realized.

The success of Taylor Morrison’s acquisition of William Lyon Homes will depend in large part on the success of the management of the combined company in integrating the operations, strategies, technologies and personnel of the two companies following the completion of the merger. The combined company may fail to realize some or all of the anticipated benefits of the merger if the integration process takes longer than expected or is more costly than expected. The failure of the combined company to meet the challenges involved in successfully integrating the operations of the two companies or to otherwise realize any of the anticipated benefits of the merger, including additional cost savings and synergies, could impair the operations of the combined company. In addition, Taylor Morrison anticipates that the overall integration of William Lyon Homes will be a time-consuming and expensive process that, without proper planning and effective and timely implementation, could significantly disrupt the combined company’s business.

Potential difficulties the combined company may encounter in the integration process include the following:

 

   

the integration of management teams, strategies, technologies and operations, products and services;

 

   

the disruption of ongoing businesses and distraction of their respective management teams from ongoing business concerns;

 

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the retention of and possible decrease in business from the existing clients of both companies;

 

   

the creation of uniform standards, controls, procedures, policies and information systems;

 

   

the reduction of the costs associated with each company’s operations;

 

   

the integration of corporate cultures and maintenance of employee morale;

 

   

the retention of key employees; and

 

   

potential unknown liabilities associated with the merger.

The anticipated cost savings, synergies and other benefits of the merger assume a successful integration of the companies and are based on projections and other assumptions, which are inherently uncertain. Even if integration is successful, anticipated cost savings, synergies and other benefits may not be achieved.

The market price of Taylor Morrison common stock may decline in the future as a result of the merger.

The market price of Taylor Morrison common stock may decline in the future as a result of the merger for a number of reasons, including:

 

   

the unsuccessful integration of William Lyon Homes and Taylor Morrison (including for the reasons set forth in the preceding risk factor); or

 

   

the failure of the combined company to achieve the perceived benefits of the merger, including financial results, as rapidly as or to the extent anticipated by financial or industry analysts.

These factors are, to some extent, beyond the control of Taylor Morrison. As a consequence, William Lyon Homes stockholders who become holders of Taylor Morrison common stock after completion of the merger could lose the value of their investment in Taylor Morrison common stock.

The merger may not be accretive and may cause dilution to the combined company’s earnings per share, which may negatively affect the market price of the Taylor Morrison common stock.

Expectations that the merger will be accretive are based on preliminary estimates which may materially change. The combined company could also encounter additional transaction-related costs or other factors such as the failure to realize all of the benefits anticipated in the merger. All of these factors could cause dilution to the combined company’s earnings per share or decrease or delay the expected accretive effect of the merger and cause a decrease in the market price of Taylor Morrison common stock.

The combined company’s future results will suffer if it does not effectively manage its expanded operations following the merger.

Following the merger, the size of the business of the combined company will increase significantly beyond the current size of either Taylor Morrison’s or William Lyon Homes’ current businesses. The combined company’s future success depends, in part, upon its ability to manage this expanded business, which may pose substantial challenges for management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity. There can be no assurance that the combined company will be successful or that it will realize the expected operating efficiencies, cost savings, revenue enhancements and other benefits currently anticipated from the merger.

Taylor Morrison and William Lyon Homes face competition, which is expected to intensify and which may reduce the market share and profits of Taylor Morrison after consummation of the merger.

Competition in the homebuilding industry is intense, and there are relatively low barriers to entry in the industry. Homebuilders compete for, among other things, home buying customers, desirable land parcels,

 

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financing, raw materials and skilled labor. Increased competition could hurt Taylor Morrison’s and William Lyon Homes’ businesses, as it could prevent both companies from acquiring attractive land parcels on which to build homes or make such acquisitions more expensive, hinder their market share expansion and lead to pricing pressures on their homes that may adversely impact their margins and revenues. If the combined company is unable to successfully compete following the merger, its business, prospects, liquidity, financial condition and results of operations could be materially and adversely affected.

Following the consummation of the merger, the combined company’s competitive position could be weakened by strategic alliances or consolidation within the homebuilding industry or the development of new technologies. The combined company’s ability to compete successfully will depend on how well it markets its products and services and on its ability to anticipate and respond to various competitive factors affecting the industry, including changes in consumer preferences or demographics, and changes in the product offerings or pricing strategies of the combined company’s competitors.

After the consummation of the merger, competition could materially adversely affect the combined company in several ways, including (i) the loss of customers and market share, (ii) the combined company’s need to lower prices or increase marketing expenses to remain competitive and (iii) the loss of business relationships within Taylor Morrison’s existing markets.

Taylor Morrison is expected to incur substantial expenses related to the merger and integration.

Taylor Morrison is expected to incur substantial expenses in connection with the merger and the related integration. There are a large number of processes, policies, procedures, operations, technologies and systems that may need to be integrated, including purchasing, accounting and finance, sales, payroll, pricing and benefits. While Taylor Morrison has assumed that a certain level of expenses will be incurred, there are many factors beyond its control that could affect the total amount or the timing of the integration expenses. Moreover, many of the expenses that will be incurred are, by their nature, difficult to estimate accurately. These expenses could, particularly in the near term, exceed the savings that Taylor Morrison expects to achieve from the elimination of duplicative expenses and the realization of economies of scale and cost savings. These integration expenses likely will result in the combined company taking significant charges against earnings following the completion of the merger, and the amount and timing of such charges are uncertain at present.

Following the consummation of the merger, Taylor Morrison will be bound by all of the obligations and liabilities of both companies.

Following the consummation of the merger, the combined company will become bound by all of the obligations and liabilities of William Lyon Homes in addition to Taylor Morrison’s obligations and liabilities existing prior to the consummation of the merger. Neither Taylor Morrison nor William Lyon Homes can predict the financial condition of the combined company at the time of the combination or the ability of the combined company to satisfy its obligations and liabilities.

The merger may result in a loss of suppliers and strategic alliances may result in the termination of existing contracts.

Following the merger, some of the suppliers of Taylor Morrison or William Lyon Homes, as historical businesses, may terminate or scale back their business relationship with the combined company. Taylor Morrison and William Lyon Homes have contracts with suppliers, vendors, and other business partners which may require Taylor Morrison or William Lyon Homes to obtain consents from these other parties in connection with the merger, which may not be obtained at all or on favorable terms. If supplier relationships or strategic alliances are adversely affected by the merger, or if the combined company, following the merger, loses the benefits of the contracts of Taylor Morrison or William Lyon Homes, the combined company’s business and financial performance could suffer.

 

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Following the merger, the combined company will have a substantial amount of debt, which could adversely affect the combined company’s business, financial condition or results of operations and prevent the combined company from fulfilling its debt-related obligations.

Following the merger, the combined company will have a substantial amount of debt. As of September 30, 2019, on a pro forma basis, the combined company would have had approximately $3.7 billion of outstanding debt (including under its outstanding debt securities and borrowings under its revolving credit facilities). The combined company’s substantial debt could have important consequences for the holders of its common stock, including:

 

   

making it more difficult for the combined company to satisfy its obligations with respect to its debt or to its trade or other creditors;

 

   

increasing the combined company’s vulnerability to adverse economic or industry conditions;

 

   

limiting the combined company’s ability to obtain additional financing to fund capital expenditures and land acquisitions, particularly when the availability of financing in the capital markets is limited;

 

   

requiring the combined company to pay higher interest rates upon refinancing or on the combined company’s variable rate indebtedness if interest rates rise;

 

   

requiring a substantial portion of the combined company’s cash flows from operations and the proceeds of any capital markets offerings or loan borrowings for the payment of interest the combined company’s debt and reducing the combined company’s ability to use its cash flows to fund working capital, capital expenditures, land acquisitions and general corporate requirements;

 

   

limiting the combined company’s flexibility in planning for, or reacting to, changes in our business and the industry in which it operates; and

 

   

placing the combined company at a competitive disadvantage to less leveraged competitors.

The combined company may not generate sufficient cash flow from operations, together with any future borrowings, to enable the combined company to pay its indebtedness, or to fund the combined company’s other liquidity needs. The combined company may need to refinance all or a portion of its indebtedness, on or before its maturity. The combined company may not be able to refinance any of its indebtedness on commercially reasonable terms or at all. In addition, the combined company may incur additional indebtedness in order to finance its operations, to fund acquisitions, or to repay existing indebtedness. If the combined company cannot service its indebtedness, it may have to take actions such as selling assets, seeking additional debt or equity or reducing or delaying capital expenditures, strategic acquisitions, investments and alliances. Any such actions, if necessary, may not be able to be effected on commercially reasonable terms or at all, or on terms that would be advantageous to the combined company’s stockholders or on terms that would not require Taylor Morrison to breach the terms and conditions of its existing or future debt agreements.

Other Risk Factors Relating to Taylor Morrison and William Lyon Homes

As a result of entering into the merger agreement, Taylor Morrison’s and William Lyon Homes’ businesses are and will be subject to the risks described above. In addition, Taylor Morrison and William Lyon Homes are, and following completion of the merger, the combined company will continue to be, subject to the risks described in Taylor Morrison’s and William Lyon Homes’ respective Annual Reports on Form 10-K for the fiscal year ended December 31, 2018, as updated by subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, all of which are filed with the SEC and incorporated by reference into this joint proxy statement/prospectus. For the location of information incorporated by reference, see Where You Can Find More Information” beginning on page 178 of this joint proxy statement/prospectus.

 

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this joint proxy statement/prospectus may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not historical facts, including, among other things, statements regarding the expected timetable for completing the merger, the benefits and synergies of the merger, future opportunities for the combined company and Taylor Morrison’s and William Lyon Homes’ future operations, financial or operating results, dividend policy, leverage ratio, future earnings and other expectations, targets or illustrative examples of financial measures for future periods. Words such as “anticipate(s)”, “expect(s)”, “intend(s)”, “plan(s)”, “target(s)”, “project(s)”, “believe(s)”, “will”, “aim(s)”, “would”, “seek(s)”, “estimate(s)” and similar expressions are intended to identify such forward-looking statements.

Forward-looking statements are based on Taylor Morrison’s and William Lyon Homes’ respective management’s current expectations and beliefs, and neither Taylor Morrison nor William Lyon Homes can give any assurance that its expectations or beliefs will be attained. These forward-looking statements are not a guarantee of future performance and are subject to a number of known and unknown risks, uncertainties and other factors that could cause actual results or events to differ, possibly materially, from the expectations or estimates reflected in such forward-looking statements, including, among others:

 

   

the parties’ ability to consummate the merger and to meet expectations regarding the timing and completion of the merger;

 

   

the satisfaction or waiver of the conditions to the completion of the merger, including the receipt of the required approval of Taylor Morrison’s stockholders and William Lyon Homes’ stockholders with respect to the merger and the receipt of regulatory clearances required to consummate the merger, in each case, on the terms expected or on the anticipated schedule;

 

   

the amount of costs, fees and expenses related to the merger agreement or the merger;

 

   

risk related to diverting the attention of the William Lyon Homes and Taylor Morrison management teams and employees from ongoing business operations;

 

   

the risk that the parties may be unable to achieve the anticipated benefits of the merger, including synergies, cost savings and operating efficiencies, within the expected time-frames or at all;

 

   

the risk that the committed financing necessary for the consummation of the merger is unavailable at the closing, and that any replacement financing may not be available on similar terms, or at all;

 

   

the risk that the businesses will not be integrated successfully or that integration may be more difficult, time-consuming or costly than expected;

 

   

the risk that the stock price of William Lyon Homes common stock or Taylor Morrison common stock may decline significantly if the merger is not consummated;

 

   

the risk that the stock price per share of Taylor Morrison common stock may change prior to the effective time;

 

   

the risk that operating costs, customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers) may be greater than expected following the merger;

 

   

the effect of the restrictions placed on William Lyon Homes’ and Taylor Morrison’s business activities and the limitations on its ability to pursue alternatives to the merger during the pendency of the merger pursuant to the merger agreement;

 

   

the nature, cost and outcome of any litigation and other legal proceedings, including any such proceedings related to the merger and instituted against William Lyon Homes, Taylor Morrison, members of their respective boards of directors and others;

 

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inherent uncertainties involved in the estimates and judgments used in the preparation of financial statements and the providing of estimates of financial measures, in accordance with GAAP and related standards, or on an adjusted basis;

 

   

general economic and market conditions;

 

   

the retention of certain key employees; and

 

   

the anticipated size of the markets and continued demand for Taylor Morrison’s and William Lyon Homes’ homes and the impact of competitive responses to the announcement of the transaction.

Additional risk factors that could cause actual results to differ materially from expectations include, but are not limited to, the risks identified by Taylor Morrison and William Lyon Homes in their respective most recent Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. All forward-looking statements speak only as of the date on which they are made. Except to the extent required by law, Taylor Morrison and William Lyon Homes expressly disclaim any obligation to release publicly any updates or revisions to any forward-looking statements contained in this joint proxy statement/prospectus to reflect any change in their expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.

 

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THE COMPANIES

Taylor Morrison Home Corporation

Taylor Morrison is one of the largest public homebuilders in the United States. Taylor Morrison is also a land developer, with a portfolio of lifestyle and master-planned communities. Taylor Morrison provides a diverse assortment of homes across a wide range of price points. Taylor Morrison strives to appeal to a broad spectrum of customers in traditionally high growth markets, where it designs, builds and sells single and multi-family detached and attached homes. Taylor Morrison operates under the Taylor Morrison and Darling Homes brand names. Taylor Morrison also provides financial services to customers through its wholly owned mortgage subsidiary, Taylor Morrison Home Funding, LLC and title insurance and closing settlement services through its title company, Inspired Title Services, LLC.

Taylor Morrison has operations in Arizona, California, Colorado, Florida, Georgia, Illinois, North Carolina, South Carolina, and Texas. Taylor Morrison’s business is organized into multiple homebuilding operating components and a financial services component, which are managed as multiple reportable segments, as follows:

 

East    Atlanta, Charlotte, Chicago, Jacksonville, Orlando, Raleigh, Southwest Florida, and Tampa
Central    Austin, Dallas, Denver, and Houston
West    Bay Area, Phoenix, Sacramento, and Southern California
Financial Services    Taylor Morrison Home Funding and Inspired Title Services

Over the last several years Taylor Morrison has grown organically and through various builder acquisitions, including its recent acquisition completed on October 2, 2018 of AV Homes, a homebuilder and land developer of residential communities in Florida, North Carolina, South Carolina, Arizona and Texas. In addition, in April 2015 Taylor Morrison completed the acquisition of JEH Homes, an Atlanta based homebuilder; in July 2015 Taylor Morrison acquired three divisions of Orleans Homes in markets within Charlotte, Chicago and Raleigh; and in January 2016 Taylor Morrison acquired Acadia Homes in Atlanta. Collectively, each of these acquisitions represents Taylor Morrison’s strategic approach in expanding its geographic footprint in high growth markets.

Taylor Morrison’s executive offices are located at 4900 N. Scottsdale Road, Suite 2000, Scottsdale, Arizona 85251 and its telephone number is (480) 840-8100. Taylor Morrison’s website is https://www.taylormorrison.com. Information included on the Taylor Morrison website is not incorporated by reference into this joint proxy statement/prospectus. Taylor Morrison common stock is currently traded on the NYSE under the symbol “TMHC”.

William Lyon Homes

William Lyon Homes, together with its subsidiaries, is one of the largest Western U.S. regional homebuilders. Headquartered in Newport Beach, California, William Lyon Homes is primarily engaged in the design, construction, marketing and sale of single-family detached and attached homes in California, Arizona, Nevada, Colorado, Washington, Oregon and Texas. William Lyon Homes’ core markets currently include Orange County, Los Angeles, the Inland Empire, the San Francisco Bay Area, Phoenix, Las Vegas, Denver, Seattle, Portland, Austin and San Antonio. William Lyon Homes has a distinguished legacy of more than 62 years of homebuilding operations, over which time it has sold in excess of 111,000 homes. William Lyon Homes believes that its markets are characterized by attractive long-term housing fundamentals and that it has a significant land supply, with 29,242 lots owned or controlled.

William Lyon Homes has significant expertise in understanding the needs of its homebuyers and designing its product offerings to meet those needs. This allows the William Lyon Homes to maximize the return on its land investments by tailoring its home offerings to meet the buyer demands in each of its markets. William Lyon

 

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Homes builds and sells across a diverse range of product lines at a variety of price points with sales to entry-level, first-time move-up, second-time move-up homebuyers, as well as a signature luxury brand and an active adult target segment. William Lyon Homes is committed to achieving the highest standards in design, quality and customer satisfaction and has received numerous industry awards and commendations throughout its operating history in recognition of its achievements.

William Lyon Homes’ executive offices are located at 4695 MacArthur Court, 8th Floor, Newport Beach California 92660, and its telephone number is (949) 833-3600. William Lyon Homes’ website is http://www.lyonhomes.com. Information included on the William Lyon Homes website is not incorporated by reference into this joint proxy statement/prospectus. William Lyon Homes Class A common stock is currently traded on the NYSE under the symbol “WLH”.

Merger Sub

Tower Merger Sub, Inc., a direct subsidiary of Taylor Morrison, is a Delaware corporation that was formed on October 30, 2019 for the sole purpose of effecting the merger. In the merger, Merger Sub will be merged with and into William Lyon Homes, with William Lyon Homes surviving the merger. As a result of the merger, William Lyon Homes will become a wholly owned, direct subsidiary of Taylor Morrison.

Merger Sub’s principal executive offices and its telephone number are the same as those of Taylor Morrison.

 

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THE TAYLOR MORRISON SPECIAL MEETING

Taylor Morrison is providing this joint proxy statement/prospectus to its stockholders in connection with the solicitation of proxies to be voted at the Taylor Morrison special meeting (or any adjournment or postponement of the Taylor Morrison special meeting). This joint proxy statement/prospectus contains important information for you to consider when deciding how and whether to vote on the matters brought before the Taylor Morrison special meeting. Please read it carefully and in its entirety.

Date, Time and Location

The date, time and place of the Taylor Morrison special meeting are set forth below:

Date: January 30, 2020

Time: 10:00 a.m., local time

Place: 4900 N. Scottsdale Road, 6th Floor, Scottsdale, AZ 85251

Purpose

At the Taylor Morrison special meeting, Taylor Morrison stockholders will consider and vote on:

 

   

Taylor Morrison Proposal I: a proposal to approve the issuance of shares of Taylor Morrison common stock (the “Share Issuance”) to stockholders of William Lyon Homes as part of the Merger Consideration (the “Share Issuance Proposal”); and

 

   

Taylor Morrison Proposal II: a proposal to adjourn the Taylor Morrison special meeting to another time or place, if necessary or appropriate, as determined by Taylor Morrison, to solicit additional proxies if there are insufficient votes at the time of the Taylor Morrison special meeting or any adjournments thereof to approve the Share Issuance Proposal (the “Taylor Morrison Adjournment Proposal”).

The adoption by Taylor Morrison stockholders of the Share Issuance Proposal is a condition to the obligations of Taylor Morrison and of William Lyon Homes to complete the merger. The approval of the Taylor Morrison Adjournment Proposal is not a condition to the obligations of Taylor Morrison or of William Lyon Homes to complete the merger.

Recommendation of the Taylor Morrison Board

In evaluating the merger and other transactions contemplated by the merger agreement, including the Share Issuance, the Taylor Morrison Board consulted with Taylor Morrison’s senior management and Taylor Morrison’s outside legal counsel and financial advisors. After consideration, the members of the Taylor Morrison Board unanimously determined that merger agreement and the transactions contemplated by the merger agreement, including the merger and the Share Issuance, are advisable, fair to, and in the best interests of, the Taylor Morrison stockholders, and (i) approved, adopted, and declared advisable the merger agreement and the other transactions contemplated by the merger agreement, including the merger and the Share Issuance, (ii) directed that the Share Issuance be submitted to the Taylor Morrison stockholders for approval at the Taylor Morrison special meeting and (iii) resolved to recommend that the Share Issuance be approved by the Taylor Morrison stockholders.

The Taylor Morrison Board recommends that Taylor Morrison stockholders vote “FOR” the Share Issuance Proposal and “FOR” the Taylor Morrison Adjournment Proposal.

Record Date; Outstanding Shares; Stockholders Entitled to Vote

The Taylor Morrison Board has fixed the close of business on December 23, 2019 as the Taylor Morrison Record Date for determination of the Taylor Morrison stockholders entitled to notice of, and to vote at, the

 

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Taylor Morrison special meeting or any adjournment or postponement thereof. Only Taylor Morrison stockholders of record on the Taylor Morrison Record Date are entitled to receive notice of, and to vote at, the Taylor Morrison special meeting or any adjournment or postponement thereof.

As of the Taylor Morrison Record Date, there were              shares of Taylor Morrison common stock outstanding and entitled to vote at the Taylor Morrison special meeting, held by approximately              holders of record. With respect to each matter to be acted upon at the Taylor Morrison special meeting, each holder of Taylor Morrison common stock is entitled to one vote for each outstanding share of Taylor Morrison common stock held by such holder.

A list of stockholders entitled to vote at the Taylor Morrison special meeting will be available for examination by any stockholder for any purpose germane to the Taylor Morrison special meeting beginning ten days prior to the Taylor Morrison special meeting between the hours of 9:00 a.m. and 5:00 p.m., local time, at 4900 N. Scottsdale Road, Suite 2000, Scottsdale, AZ 85251, Taylor Morrison’s principal place of business, and ending on the date of the Taylor Morrison special meeting, and such list will also be available at the Taylor Morrison special meeting during the duration of the meeting.

Quorum

A quorum of outstanding shares is necessary to take action at the Taylor Morrison special meeting. The presence in person or by proxy of the holders of Taylor Morrison common stock having a majority of the votes that could be cast by the holders of Taylor Morrison common stock entitled to vote at the Taylor Morrison special meeting will constitute a quorum at the Taylor Morrison special meeting. Shares held by a beneficial owner in “street name” who does not give the nominee or other intermediary that holds such shares instructions on how to vote such shares on any proposal to be voted on at the Taylor Morrison special meeting (a “broker non-vote”) will not be deemed to be in attendance at the meeting or counted for purposes of determining whether a quorum has been achieved. However, abstentions will be counted as present in determining the existence of a quorum. If you are a Taylor Morrison stockholder and fail to vote or fail to instruct your broker or nominee to vote, your shares will not be counted as present for purposes of determining whether a quorum is present.

Required Vote

The required number of votes to approve the matters to be voted upon at the Taylor Morrison special meeting depends on the particular item to be voted upon as set out below:

 

    

Item

  

Vote Necessary for Approval*

Taylor Morrison Proposal I    Share Issuance Proposal    Approval requires the affirmative vote of a majority in voting power of shares of Taylor Morrison common stock present in person or represented by proxy and entitled to vote thereon, assuming a quorum is present.
Taylor Morrison Proposal II    Taylor Morrison Adjournment Proposal    Approval requires the affirmative vote of a majority in voting power of shares of Taylor Morrison common stock cast at the Taylor Morrison special meeting and present in person or represented by proxy and entitled to vote thereon.

 

*

Abstentions and Broker Non-Votes. Abstentions will have the same effect as a vote against the Share Issuance Proposal and the Taylor Morrison Adjournment Proposal. Under the rules of the New York Stock Exchange, if you hold your shares of Taylor Morrison common stock in street name, your nominee or intermediary may not vote your shares on proposals without instructions from you, other than “routine” proposals. None of the

 

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  proposals that will be voted on at the Taylor Morrison special meeting are “routine.” Therefore, your nominee or intermediary does not have discretionary authority to vote on any of the proposals. Accordingly, if you do not provide voting instructions on any proposal, your shares will not be deemed in attendance at the Taylor Morrison special meeting and will not be voted. If you provide voting instructions on one but not both proposals, your shares will not be voted on whichever proposal you did not provide voting instructions for. Any shares of Taylor Morrison common stock deemed not in attendance at the meeting, whether due to a record holder’s failure to vote in person or by proxy or a “street name” holder’s failure to provide any voting instructions to such holder’s nominee or intermediary, and broker non-votes, will have no effect on the Share Issuance Proposal or the Taylor Morrison Adjournment Proposal, assuming a quorum is present.

Your vote is very important. Please vote by internet, by telephone or by signing and returning the enclosed proxy card whether or not you plan to attend the Taylor Morrison special meeting in person.

Share Ownership of and Voting by Taylor Morrison Directors and Executive Officers

At the Taylor Morrison Record Date, Taylor Morrison’s directors and executive officers and their affiliates beneficially owned and had the right to vote an aggregate of                  shares of Taylor Morrison common stock, which represents     % of the voting power of the outstanding shares of Taylor Morrison common stock entitled to vote at the Taylor Morrison special meeting.

It is expected that Taylor Morrison’s directors and executive officers will vote their respective shares “FOR” the approval of the Share Issuance Proposal and “FOR” the approval of the Taylor Morrison Adjournment Proposal.

Voting of Shares

Whether or not you plan to attend the Taylor Morrison special meeting, please vote your shares of Taylor Morrison common stock. If you are a registered or “record” holder, which means your shares of Taylor Morrison common stock are registered in your name with Computershare Trust Company, N.A., Taylor Morrison’s transfer agent and registrar, you may vote in person at the special meeting or by proxy. You may specify whether your shares of Taylor Morrison common stock should be voted for or against, or whether you abstain from voting with respect to, the proposal to adopt the merger agreement, the proposal to approve merger-related compensation and the Taylor Morrison Adjournment Proposal. If your shares of Taylor Morrison common stock are held in “street name,” which means your shares are held of record in an account with a broker, bank or other nominee, you must follow the instructions from your broker, bank or other nominee in order to vote.

You may attend the Taylor Morrison special meeting and vote your shares in person or you may submit a proxy by any of the following methods:

 

   

By Mail. If you choose to submit a proxy to vote by mail, simply complete the enclosed proxy card, date and sign it, and return it in the postage-paid envelope provided. Your shares of Taylor Morrison common stock will be voted in accordance with the instructions on your proxy card. If you sign your proxy card and return it without marking any voting instructions, your shares of Taylor Morrison common stock will be voted “FOR” the Share Issuance Proposal and “FOR” the Taylor Morrison Adjournment Proposal, and in the discretion of the persons named as proxies on all other matters that may properly come before the Taylor Morrison special meeting or any adjournment or postponement of the Taylor Morrison special meeting.

 

   

By Telephone. You may submit a proxy to vote your shares of Taylor Morrison common stock by telephone by calling the toll-free number provided on your proxy card any time up to 11:59 p.m. Eastern Time on January 29, 2020. If you vote by telephone, you should not return your proxy card.

 

   

Through the Internet. You may also submit a proxy to vote through the Internet by signing on to the website identified on your proxy card and following the procedures described in the website any time

 

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up to 11:59 p.m. Eastern Time on January 29, 2020. If you vote by Internet, you should not return your proxy card.

If you are a beneficial owner and hold your shares of Taylor Morrison common stock in street name, or through a nominee or intermediary, such as a bank or broker, you will receive separate instructions from such nominee or intermediary describing how to vote your shares. The availability of telephonic or Internet voting will depend on the intermediary’s voting process. Please check with your nominee or intermediary and follow the voting instructions provided by your nominee or intermediary with these materials.

Your vote is very important. Whether or not you plan to attend the Taylor Morrison special meeting, please act promptly to vote your shares of Taylor Morrison common stock with respect to the proposals described above. You may vote your shares of Taylor Morrison common stock by completing, signing and dating the enclosed proxy card and returning it in the postage-paid envelope provided. You also may vote your shares of Taylor Morrison common stock by telephone or through the Internet by following the instructions set forth on the proxy card. If you attend the Taylor Morrison special meeting, you may vote your shares of Taylor Morrison common stock in person, even if you have previously submitted a proxy in writing, by telephone or through the Internet. If your shares of Taylor Morrison common stock are held in the name of a nominee or intermediary, please follow the instructions on the voting instruction card furnished by such record holder.

Revocability of Proxies; Changing Your Vote

You may revoke your proxy or change your vote at any time before your shares of Taylor Morrison common stock are voted at the Taylor Morrison special meeting by:

 

   

sending a signed written notice stating that you revoke your proxy to the Corporate Secretary, at Taylor Morrison’s offices at 4900 N. Scottsdale Road, Suite 2000, Scottsdale, AZ 85251, that bears a later date than the date of the proxy you want to revoke and is received by the Taylor Morrison Corporate Secretary prior to the applicable special meeting;

 

   

submitting a valid, later-dated proxy via mail, over the telephone or through the Internet; or

 

   

attending the Taylor Morrison special meeting (or if the Taylor Morrison special meeting is adjourned or postponed, attending the adjourned or postponed meeting) and voting in person, which will automatically cancel any proxy previously given, or revoking your proxy in person, but your attendance alone will not constitute a vote or revoke any proxy previously given.

Beneficial owners who hold their shares of Taylor Morrison common stock in “street name” cannot revoke their proxies in person at the Taylor Morrison special meeting because the Taylor Morrison stockholders of record who have the right to cast the votes will not be present. If beneficial owners of shares of Taylor Morrison common stock wish to change their votes after returning voting instructions, they should contact their bank, broker or other agent before the Taylor Morrison special meeting to determine whether they can do so.

Solicitation of Proxies; Expenses of Solicitation

This joint proxy statement/prospectus is being provided to Taylor Morrison stockholders in connection with the solicitation of proxies by the Taylor Morrison Board to be voted at the Taylor Morrison special meeting and at any adjournments or postponements of the Taylor Morrison special meeting. Taylor Morrison and William Lyon Homes will each bear its own costs and expenses in connection with the solicitation of proxies for the Taylor Morrison special meeting and the William Lyon Homes special meeting, respectively, including the costs of filing, printing and mailing this joint proxy statement/prospectus. Taylor Morrison has engaged Innisfree M&A Incorporated to assist in the distribution and solicitation of proxies for the Taylor Morrison special meeting and will pay Innisfree M&A Incorporated a fee of approximately $25,000, plus reimbursement of reasonable expenses, for these services.

 

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Taylor Morrison is making this solicitation by mail, but Taylor Morrison’s directors, officers and employees also may solicit by mail, telephone, facsimile, electronic transmission, personal interview or otherwise. Such directors, officers and employees will not receive additional compensation, but may be reimbursed by Taylor Morrison for out-of-pocket expenses in connection with such solicitation. Taylor Morrison will reimburse brokerage firms and other custodians, nominees and fiduciaries for their reasonable expenses incurred in sending proxies and proxy materials to beneficial owners.

Householding

The SEC has adopted a rule concerning the delivery of annual reports and proxy statements. It permits Taylor Morrison, with your permission, to send a single notice of meeting and, to the extent requested, a single set of this joint proxy statement/prospectus to any household at which two or more stockholders reside if Innisfree M&A Incorporated believes they are members of the same family. This rule is called “householding,” and its purpose is to help reduce printing and mailing costs of proxy materials.

A number of brokerage firms have instituted householding. If you and members of your household have multiple accounts holding shares of Taylor Morrison common stock, you may have received a householding notification from your broker. Please contact your broker directly if you have questions, require additional copies of this joint proxy statement/prospectus or wish to revoke your decision to household. These options are available to you at any time.

Adjournment

The Taylor Morrison special meeting may be adjourned from time to time to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place, if any, thereof and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At the adjourned Taylor Morrison special meeting, any business may be transacted that might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, notice of the adjourned meeting in accordance with the Taylor Morrison Bylaws must be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for determination of stockholders entitled to vote is fixed for the adjourned meeting, the Taylor Morrison Board will fix as the record date for determining Taylor Morrison stockholders entitled to notice of such adjourned Taylor Morrison special meeting the same or an earlier date as that fixed for determination of Taylor Morrison stockholders entitled to vote at the adjourned meeting, and will give notice of the adjourned Taylor Morrison special meeting to each Taylor Morrison stockholder of record as of the record date so fixed for notice of such adjourned Taylor Morrison special meeting. All proxies will be voted in the same manner as they would have been voted at the original convening of the Taylor Morrison special meeting, except for any proxies that have been effectively revoked or withdrawn prior to the time the proxy is voted at the reconvened meeting.

Tabulation of Votes; Methods of Voting; Results

Taylor Morrison will retain an independent party to receive and tabulate the proxies and to serve as the inspector of election to certify the results of the Taylor Morrison special meeting.

Other Information

The matters to be considered at the Taylor Morrison special meeting are of great importance to Taylor Morrison stockholders. Accordingly, you are urged to read and carefully consider the information contained in or incorporated by reference into this joint proxy statement/prospectus and complete, date, sign and promptly return the enclosed proxy card in the postage-paid envelope provided. You may also vote your shares by telephone or through the Internet. If you submit your proxy by telephone or through the Internet, you do not need to return the enclosed proxy card.

 

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Assistance; Proxy Solicitor

If you need assistance in completing your proxy card or have questions regarding the Taylor Morrison special meeting, please contact:

Taylor Morrison Home Corporation

4900 N. Scottsdale Road, Suite 2000

Scottsdale, AZ 85251

Attention: Investor Relations

Email: investor@taylormorrison.com

Telephone: (480) 840-8100

or

Innisfree M&A Incorporated

501 Madison Ave, 20th Floor

New York, New York 10022

Stockholders may call toll-free: (888) 750-5834

Banks and Brokers may call collect: (212) 750-5833

 

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TAYLOR MORRISON PROPOSALS

Proposal I. Share Issuance Proposal

In the Share Issuance Proposal, Taylor Morrison is asking its stockholders to approve the issuance of shares of Taylor Morrison common stock in connection with the merger.

Approval of the Share Issuance Proposal by Taylor Morrison stockholders is a condition to the consummation of the merger. If the Share Issuance Proposal is not approved, the merger will not occur.

The Share Issuance Proposal requires the affirmative vote of a majority in voting power of shares of Taylor Morrison common stock present in person or represented by proxy and entitled to vote thereon, assuming a quorum is present. If you fail to vote or fail to instruct your broker or other nominee to vote on the Share Issuance Proposal, it will have no effect on the outcome of the Share Issuance Proposal, assuming a quorum is present; however, if you vote to abstain it will have the effect of a vote cast “AGAINST” the Share Issuance Proposal.

The Taylor Morrison Board recommends that Taylor Morrison stockholders vote “FOR” the Share Issuance Proposal (Proposal I).

Proposal II. Taylor Morrison Adjournment Proposal

In the Taylor Morrison Adjournment Proposal, Taylor Morrison is asking its stockholders to adjourn the Taylor Morrison special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve the Share Issuance Proposal. Approval of the Taylor Morrison Adjournment Proposal by Taylor Morrison stockholders is not required for completion of the merger. The Taylor Morrison Adjournment Proposal requires the affirmative vote of a majority in voting power of shares of Taylor Morrison common stock present in person or represented by proxy and entitled to vote thereon. If you fail to vote or fail to instruct your broker or other nominee to vote on the Taylor Morrison Adjournment Proposal, it will have no effect on the outcome of the Taylor Morrison Adjournment Proposal, assuming a quorum is present; however, if you vote to abstain it will have the effect of a vote cast “AGAINST” the Taylor Morrison Adjournment Proposal.

The Taylor Morrison Board recommends that Taylor Morrison stockholders vote “FOR” the Taylor Morrison Adjournment Proposal (Proposal II).

Other Matters

As of the date hereof, Taylor Morrison has no knowledge of any business that will be presented for consideration at the Taylor Morrison special meeting and which would be required to be set forth in this joint proxy statement/prospectus or the related proxy card other than the matters set forth above and in the Taylor Morrison Notice of Special Meeting of Stockholders. If any other matter is properly presented at the Taylor Morrison special meeting for consideration, it is intended that the persons named in the enclosed form of proxy and acting thereunder will vote in accordance with their best judgment on such matter.

 

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THE WILLIAM LYON HOMES SPECIAL MEETING

William Lyon Homes is providing this joint proxy statement/prospectus to its stockholders in connection with the solicitation of proxies to be voted at the William Lyon Homes special meeting (or any adjournment or postponement of the William Lyon Homes special meeting). This joint proxy statement/prospectus contains important information for you to consider when deciding how and whether to vote on the matters brought before the William Lyon Homes special meeting. Please read it carefully and in its entirety.

Date, Time and Location

The date, time and place of the William Lyon Homes special meeting are set forth below:

Date: January 30, 2020

Time: 9:00 a.m., local time

Place: Renaissance Newport Beach Hotel, 4500 MacArthur Boulevard, Newport Beach, California 92660

Purpose

At the William Lyon Homes special meeting, William Lyon Homes stockholders will consider and vote on:

 

   

Proposal I: the adoption of the merger agreement, pursuant to which Merger Sub will be merged with and into William Lyon Homes, with William Lyon Homes continuing as the Surviving Corporation in the merger and a wholly owned, direct subsidiary of Taylor Morrison (which we refer to as the “Merger Proposal”);

 

   

Proposal II: to approve, on an advisory (non-binding) basis, certain compensation that may become payable to the named executive officers of William Lyon Homes in connection with the merger (the “Advisory Compensation Proposal”); and

 

   

Proposal III: to approve an adjournment of the William Lyon Homes special meeting to another time or place, if necessary or appropriate, as determined by William Lyon Homes, to solicit additional proxies if there are insufficient votes at the time of the William Lyon Homes special meeting or any adjournments thereof to approve the Merger Proposal (which we refer to as the “William Lyon Homes Adjournment Proposal”).

The adoption by William Lyon Homes stockholders of the Merger Proposal is a condition to the obligations of Taylor Morrison and of William Lyon Homes to complete the merger. The approval of the Advisory Compensation Proposal is not a condition to the obligations of Taylor Morrison or of William Lyon Homes to complete the merger. The approval of the William Lyon Homes Adjournment Proposal is not a condition to the obligations of Taylor Morrison or of William Lyon Homes to complete the merger.

Recommendation of the William Lyon Homes Board

In evaluating the merger and other transactions contemplated by the merger agreement, the William Lyon Homes Board consulted with William Lyon Homes’ senior management and William Lyon Homes’ outside legal counsel and financial advisors. After consideration, the members of the William Lyon Homes Board unanimously determined that the merger agreement and the transactions contemplated by the merger agreement, including the merger, are advisable, fair to, and in the best interests of, William Lyon Homes and its stockholders, and approved, adopted, and declared advisable the merger agreement and the other transactions contemplated by the merger agreement, including the proposed merger.

 

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The William Lyon Homes Board recommends that William Lyon Homes stockholders vote “FOR” the Merger Proposal, “FOR” the Advisory Compensation Proposal and “FOR” the William Lyon Homes Adjournment Proposal.

Record Date; Outstanding Shares; Stockholders Entitled to Vote

The William Lyon Homes Board has fixed the close of business on December 23, 2019 as the record date (the “William Lyon Homes Record Date”) for determination of the William Lyon Homes stockholders entitled to notice of, and to vote at, the William Lyon Homes special meeting or any adjournment or postponement thereof. Only William Lyon Homes stockholders of record on the William Lyon Homes Record Date are entitled to receive notice of, and to vote at, the William Lyon Homes special meeting or any adjournment or postponement thereof.

As of the William Lyon Homes Record Date, there were                  shares of William Lyon Homes Class A common stock held by approximately                  holders of record and                  shares of William Lyon Homes Class B common stock held by approximately                  holders of record, in each case, outstanding and entitled to vote at the William Lyon Homes special meeting. With respect to each matter to be acted upon at the William Lyon Homes special meeting, each holder of shares of William Lyon Homes Class A common stock is entitled to one vote for each outstanding shares of William Lyon Homes Class A common stock held by such holder and each holder of shares of William Lyon Homes Class B common stock is entitled to five votes for each outstanding share of William Lyon Homes Class B common stock held by such holder with holders of shares of William Lyon Homes Class A common stock and William Lyon Homes Class B common stock voting together as a single class on all matters submitted to a vote of stockholders at the William Lyon Homes special meeting.

As described in further detail under the heading “The Voting Agreement” beginning on page 133 of this joint proxy statement/prospectus, Taylor Morrison and the Lyon Stockholders entered into a voting agreement pursuant to which, among other things, the Lyon Stockholders agreed to vote all outstanding shares of William Lyon Homes common stock currently held or thereafter acquired by the Lyon Stockholders (representing approximately      % of the outstanding shares of William Lyon Homes common stock as of the William Lyon Homes Record Date) in favor of the Merger Proposal and against any proposal by third parties to acquire William Lyon Homes and to take certain other actions in furtherance of the transactions contemplated by the merger agreement. In the event that the William Lyon Homes Board changes its recommendation that the William Lyon Homes stockholders vote for the Merger Proposal, the Lyon Stockholders will only be required under the voting agreement to vote shares of William Lyon Homes common stock equal to 30% of the aggregate voting power attributable to the outstanding shares of William Lyon Homes common stock in accordance with the foregoing terms.

A list of stockholders entitled to vote at the William Lyon Homes special meeting will be available for examination by any stockholder for any purpose germane to the William Lyon Homes special meeting beginning ten days prior to the William Lyon Homes special meeting between the hours of 9:00 a.m. and 5:00 p.m., local time, at 4695 MacArthur Court, 8th Floor, Newport Beach, CA 92660, William Lyon Homes’ principal place of business, and ending on the date of the William Lyon Homes special meeting, and such list will also be available at the William Lyon Homes special meeting during the duration of the meeting.

Quorum

A quorum of outstanding shares of William Lyon Homes common stock is necessary to take action at the William Lyon Homes special meeting. The presence in person or by proxy of the holders of a majority in voting power of all of the shares of William Lyon Homes common stock entitled to vote at the William Lyon Homes special meeting will constitute a quorum at the William Lyon Homes special meeting. Shares held by a beneficial owner in “street name” who does not give the nominee or other intermediary that holds such shares instructions on how to vote such shares on any proposal to be voted on at the William Lyon Homes special meeting (a “broker non-vote”) will not be deemed to be in attendance at the meeting or counted for purposes of determining

 

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whether a quorum has been achieved. However, abstentions will be counted as present in determining the existence of a quorum. If you are a William Lyon homes stockholder and fail to vote or fail to instruct your broker or nominee to vote, your shares will not be counted as present for purposes of determining whether a quorum is present.

Required Vote

The required number of votes to approve the matters to be voted upon at the William Lyon Homes special meeting depends on the particular item to be voted upon as set out below:

 

    

Item

  

Vote Necessary for Approval*

Proposal I    The Merger Proposal    Approval requires the affirmative vote, in person or by proxy, of holders of a majority of the voting power of the shares of William Lyon Homes common stock outstanding as of the William Lyon Homes Record Date entitled to vote on the Merger Proposal.
Proposal II    The Advisory Compensation Proposal    Approval requires the affirmative vote, in person or by proxy, of the holders of a majority of the voting power of the shares of William Lyon Homes common stock cast at a meeting where a quorum is present.
Proposal III    The William Lyon Homes Adjournment Proposal    Approval requires the affirmative vote, in person or by proxy, of the holders of a majority of the voting power of the shares of William Lyon Homes common stock cast at a meeting where a quorum is present.

 

*

Abstentions and Broker Non-Votes. Abstentions will have the same effect as a vote against the Merger Proposal, and will have no effect on the Advisory Compensation Proposal or the William Lyon Homes Adjournment Proposal. Under the rules of the New York Stock Exchange, if you hold your shares of William Lyon Homes common stock in street name, your nominee or intermediary may not vote your shares on proposals without instructions from you, other than “routine” proposals. None of the proposals that will be voted on at the William Lyon Homes special meeting are “routine.” Therefore, your nominee or intermediary does not have discretionary authority to vote on any of the proposals. Accordingly, if you do not provide voting instructions on any proposal, your shares will not be deemed in attendance at the William Lyon Homes special meeting and will not be voted. If you provide voting instructions on one or more but fewer than all three proposals, your shares will not be voted on whichever proposal(s) you did not provide voting instructions for. Any shares of William Lyon Homes common stock deemed not in attendance at the meeting, whether due to a record holder’s failure to vote in person or by proxy or a “street name” holder’s failure to provide any voting instructions to such holder’s nominee or intermediary, and broker non-votes, will have the same effect as a vote against the Merger Proposal but will have no effect on the William Lyon Homes Adjournment Proposal or the Advisory Compensation Proposal, assuming a quorum is present.

Your vote is very important. Please vote by internet, by telephone or by signing and returning the enclosed proxy card whether or not you plan to attend the William Lyon Homes special meeting in person.

Share Ownership of and Voting by William Lyon Homes Directors and Executive Officers

As of the William Lyon Homes Record Date, William Lyon Homes’ directors and executive officers and their affiliates beneficially owned and had the right to vote an aggregate of                  shares of William Lyon

 

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Homes Class A common stock and                  shares of William Lyon Homes Class B common stock, which represents     % of the voting power of the outstanding shares of William Lyon Homes common stock entitled to vote at the William Lyon Homes special meeting.

It is expected that William Lyon Homes’ directors and executive officers will vote their respective shares of William Lyon Homes common stock “FOR” the Merger Proposal, “FOR” the Advisory Compensation Proposal and “FOR” the William Lyon Homes Adjournment Proposal.

Voting of Shares

Whether or not you plan to attend the William Lyon Homes special meeting, please vote your shares of William Lyon Homes common stock. If you are a registered or “record” holder, which means your shares of William Lyon Homes common stock are registered in your name with American Stock Transfer & Trust Company, LLC, William Lyon Homes’ transfer agent and registrar, you may vote in person at the special meeting or by proxy. You may specify whether your shares of William Lyon Homes common stock should be voted for or against, or whether you abstain from voting with respect to, the Merger Proposal, the Advisory Compensation Proposal and the William Lyon Homes Adjournment Proposal. If your shares of William Lyon Homes common stock are held in “street name,” which means your shares are held of record in an account with a broker, bank or other nominee, you must follow the instructions from your broker, bank or other nominee in order to vote.

You may attend the William Lyon Homes special meeting and vote your shares in person or you may submit a proxy by any of the following methods:

 

   

By Mail. If you choose to submit a proxy to vote by mail, simply complete the enclosed proxy card, date and sign it, and return it in the postage-paid envelope provided. Your shares of William Lyon Homes common stock will be voted in accordance with the instructions on your proxy card. If you sign your proxy card and return it without marking any voting instructions, your shares of William Lyon Homes common stock will be voted “FOR” the Merger Proposal, “FOR” the Advisory Compensation Proposal, “FOR” the William Lyon Homes Adjournment Proposal, and in the discretion of the persons named as proxies on all other matters that may properly come before the William Lyon Homes special meeting or any adjournment or postponement of the William Lyon Homes special meeting.

 

   

By Telephone. You may submit a proxy to vote your shares of William Lyon Homes common stock by telephone by calling the toll-free number provided on your proxy card any time up to 11:59 p.m. Eastern Time on January 29, 2020. If you vote by telephone, you should not return your proxy card.

 

   

Through the Internet. You may also submit a proxy to vote your shares of William Lyon Homes common stock through the Internet by signing on to the website identified on your proxy card and following the procedures described in the website any time up to 11:59 p.m. Eastern Time on January 29, 2020. If you vote by Internet, you should not return your proxy card.

If you are a beneficial owner and hold your shares your shares of William Lyon Homes common stock in street name, or through a nominee or intermediary, such as a bank or broker, you will receive separate instructions from such nominee or intermediary describing how to vote your shares. The availability of telephonic or Internet voting will depend on the intermediary’s voting process. Please check with your nominee or intermediary and follow the voting instructions provided by your nominee or intermediary with these materials.

Your vote is very important. Whether or not you plan to attend the William Lyon Homes special meeting, please act promptly to vote your shares of William Lyon Homes common stock with respect to the proposals described above. You may vote your shares of William Lyon Homes common stock by completing, signing and dating the enclosed proxy card and returning it in the postage-paid envelope

 

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provided. You also may vote your shares of William Lyon Homes common stock by telephone or through the Internet by following the instructions set forth on the proxy card. If you attend the William Lyon Homes special meeting, you may vote your shares of William Lyon Homes common stock in person, even if you have previously submitted a proxy in writing, by telephone or through the Internet. If your shares are held in the name of a nominee or intermediary, please follow the instructions on the voting instruction card furnished by such record holder.

Revocability of Proxies; Changing Your Vote

You may revoke your proxy or change your vote at any time before your shares of William Lyon Homes common stock are voted at the William Lyon Homes special meeting by:

 

   

sending a signed written notice stating that you revoke your proxy to the Corporate Secretary, at William Lyon Homes’ offices at 4695 MacArthur Court, 8th Floor, Newport Beach, CA 92660, that bears a later date than the date of the proxy you want to revoke and is received by the William Lyon Homes Corporate Secretary prior to the applicable special meeting;

 

   

submitting a valid, later-dated proxy via mail, over the telephone or through the Internet; or

 

   

attending the William Lyon Homes special meeting (or if the William Lyon Homes special meeting is adjourned or postponed, attending the adjourned or postponed meeting) and voting in person, which will automatically cancel any proxy previously given, or revoking your proxy in person, but your attendance alone will not constitute a vote or revoke any proxy previously given.

Beneficial owners who hold their shares of William Lyon Homes common stock in “street name” cannot revoke their proxies in person at the William Lyon Homes special meeting because the William Lyon Homes stockholders of record who have the right to cast the votes will not be present. If beneficial owners of William Lyon Homes common stock wish to change their votes after returning voting instructions, they should contact their bank, broker or other agent before the William Lyon Homes special meeting to determine whether they can do so.

Solicitation of Proxies; Expenses of Solicitation

This joint proxy statement/prospectus is being provided to William Lyon Homes stockholders in connection with the solicitation of proxies by the William Lyon Homes Board to be voted at the William Lyon Homes special meeting and at any adjournments or postponements of the William Lyon Homes special meeting. William Lyon Homes and Taylor Morrison will each bear its own costs and expenses in connection with the solicitation of proxies for the William Lyon Homes special meeting and the Taylor Morrison special meeting, respectively, including the costs of filing, printing and mailing this joint proxy statement/prospectus. William Lyon Homes has engaged D.F. King & Co., Inc. (“D.F. King”) to assist in the distribution and solicitation of proxies for the William Lyon Homes special meeting and will pay D.F. King a fee of approximately $12,500, plus reimbursement of reasonable expenses, for these services.

William Lyon Homes is making this solicitation by mail, but William Lyon Homes’ directors, officers and employees also may solicit by mail, telephone, facsimile, electronic transmission, personal interview or otherwise. Such directors, officers and employees will not receive additional compensation, but may be reimbursed by William Lyon Homes for out-of-pocket expenses in connection with such solicitation. William Lyon Homes will reimburse brokerage firms and other custodians, nominees and fiduciaries for their reasonable expenses incurred in sending proxies and proxy materials to beneficial owners.

Householding

The SEC has adopted a rule concerning the delivery of annual reports and proxy statements. It permits William Lyon Homes, with your permission, to send a single notice of meeting and, to the extent requested, a

 

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single set of this joint proxy statement/prospectus to any household at which two or more stockholders reside if William Lyon Homes believes they are members of the same family. This rule is called “householding,” and its purpose is to help reduce printing and mailing costs of proxy materials.

A number of brokerage firms have instituted householding. If you and members of your household have multiple accounts holding shares of William Lyon Homes common stock, you may have received a householding notification from your broker. Please contact your broker directly if you have questions, require additional copies of this joint proxy statement/prospectus or wish to revoke your decision to household. These options are available to you at any time.

Adjournment

The William Lyon Homes special meeting may be adjourned from time to time to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place, if any, thereof and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At the adjourned William Lyon Homes special meeting, any business may be transacted that might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, notice of the adjourned meeting in accordance with the William Lyon Homes Bylaws must be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for determination of stockholders entitled to vote is fixed for the adjourned meeting, the William Lyon Homes Board will fix as the record date for determining William Lyon Homes stockholders entitled to notice of such adjourned William Lyon Homes special meeting the same or an earlier date as that fixed for determination of William Lyon Homes stockholders entitled to vote at the adjourned meeting, and will give notice of the adjourned William Lyon Homes special meeting to each William Lyon Homes stockholder of record as of the record date so fixed for notice of such adjourned William Lyon Homes special meeting. All proxies will be voted in the same manner as they would have been voted at the original convening of the William Lyon Homes special meeting, except for any proxies that have been effectively revoked or withdrawn prior to the time the proxy is voted at the reconvened meeting.

Tabulation of Votes; Methods of Voting; Results

William Lyon Homes will retain an independent party, to receive and tabulate the proxies, and to serve as the inspector of election to certify the results of the William Lyon Homes special meeting.

Other Information

The matters to be considered at the William Lyon Homes special meeting are of great importance to William Lyon Homes stockholders. Accordingly, you are urged to read and carefully consider the information contained in or incorporated by reference into this joint proxy statement/prospectus and complete, date, sign and promptly return the enclosed proxy card in the postage-paid envelope provided. You may also vote your shares by telephone or through the Internet. If you submit your proxy by telephone or through the Internet, you do not need to return the enclosed proxy card.

 

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Assistance; Proxy Solicitor

If you need assistance in completing your proxy card or have questions regarding the William Lyon Homes special meeting, please contact:

D.F. King & Co., Inc.

48 Wall Street, 22nd Floor

New York, New York 10005

Stockholders may call toll free: (800) 334-0384

Banks and Brokers may call collect: (212) 269-5550

Email: WLH@dfking.com

or

William Lyon Homes

4695 MacArthur Court, 8th Floor

Newport Beach, California 92660

Attention: Investor Relations

Telephone: (310) 622-8223

 

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WILLIAM LYON HOMES PROPOSALS

Proposal I. Merger Proposal

In the Merger Proposal, William Lyon Homes is asking its stockholders to adopt the merger agreement, pursuant to which Merger Sub will be merged with and into William Lyon Homes, with William Lyon Homes continuing as the Surviving Corporation in the merger and a wholly owned, direct subsidiary of Taylor Morrison. William Lyon Homes stockholders should carefully read this joint proxy statement/prospectus in its entirety, including the documents incorporated by reference and the merger agreement, for more detailed information concerning the merger agreement and the Merger Proposal. For a summary and detailed information regarding the Merger Proposal, see the information about the merger and the merger agreement throughout this joint proxy statement/prospectus, including the information set forth in the sections entitled “The Merger” and “The Merger Agreement” beginning on pages 56 and 111, respectively, of this joint proxy statement/prospectus. A copy of the merger agreement is attached as Appendix A to this joint proxy statement/prospectus.

Approval of the Merger Proposal by the William Lyon Stockholders is a condition to the consummation of the merger. If the Merger Proposal is not approved, the merger will not occur.

The Merger Proposal requires the affirmative vote of the holders of a majority of the voting power of the shares of William Lyon Homes common stock outstanding as of the William Lyon Homes Record Date entitled to vote on the Merger Proposal. If you abstain from voting, fail to cast your vote, in person or by proxy, or fail to give voting instructions to your brokerage firm, bank, trust or other nominee, it will have the same effect as a vote “AGAINST” the Merger Proposal.

The William Lyon Homes Board recommends that William Lyon Homes stockholders vote “FOR” the Merger Proposal (Proposal I).

Proposal II. Advisory Compensation Proposal

In the Advisory Compensation Proposal, as required by Section 14A of the Exchange Act and the applicable SEC rules promulgated thereunder, William Lyon Homes is required to submit a proposal to William Lyon Homes’ stockholders for a nonbinding, advisory vote to approve the payment by William Lyon Homes of certain compensation that may be paid or become payable to the named executive officers of William Lyon Homes that is based on or otherwise relates to the merger, as described in “The Merger—Interests of Certain William Lyon Homes Directors and Officers in the Merger,” beginning on page 100 of this joint proxy statement/prospectus.

The William Lyon Homes Board unanimously recommends that William Lyon Homes’ stockholders approve the following resolution:

RESOLVED, that the compensation that may be paid or become payable to William Lyon Homes’ named executive officers in connection with the merger, and the agreement or understandings pursuant to which such compensation may be paid or become payable, in each case, as disclosed pursuant to Item 402(t) of Regulation S-K in the narrative disclosure and related tables is hereby APPROVED.

The vote on the Advisory Compensation Proposal is a vote separate and apart from the vote on the Merger Proposal. Accordingly, you may vote in favor of the Merger Proposal and vote against the Advisory Compensation Proposal and vice versa. Because the vote on the Advisory Compensation Proposal is advisory only, it will not be binding on either William Lyon Homes or Taylor Morrison. Accordingly, if the merger is approved and the merger is completed, the compensation will become payable if the applicable contractual conditions are satisfied, regardless of the outcome of the vote on the Advisory Compensation Proposal.

The Advisory Compensation Proposal requires the affirmative vote of the holders of a majority of the voting power of the shares of William Lyon Homes common stock cast at the meeting where a quorum is present. If you abstain from voting, fail to vote or fail to instruct your broker or nominee to vote on the Advisory Compensation Proposal, assuming a quorum is present, it will have no effect on the Advisory Compensation Proposal.

 

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The William Lyon Homes Board recommends that William Lyon Homes stockholders vote “FOR” the Advisory Compensation Proposal (Proposal II).

Proposal III. William Lyon Homes Adjournment Proposal

In the William Lyon Homes Adjournment Proposal, William Lyon Homes is asking its stockholders to adjourn the William Lyon Homes special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve the Share Issuance Proposal. Approval of the William Lyon Homes Adjournment Proposal by William Lyon Homes stockholders is not required for completion of the merger.

Approval of the William Lyon Homes Adjournment Proposal requires the affirmative vote of the holders of a majority of the voting power of the shares of William Lyon Homes common stock cast at the meeting where a quorum is present. If you abstain from voting, fail to vote or fail to instruct your broker or other nominee to vote on the William Lyon Homes Adjournment Proposal, it will have no effect on the William Lyon Homes Adjournment Proposal.

The William Lyon Homes Board recommends that William Lyon Homes stockholders vote “FOR” the William Lyon Homes Adjournment Proposal (Proposal III).

Other Matters

As of the date hereof, William Lyon Homes has no knowledge of any business that will be presented for consideration at the William Lyon Homes special meeting and which would be required to be set forth in this joint proxy statement/prospectus or the related proxy card other than the matters set forth above and in William Lyon Homes Notice of Special Meeting of Stockholders. If any other matter is properly presented at the William Lyon Homes special meeting for consideration, it is intended that the persons named in the enclosed form of proxy and acting thereunder will vote in accordance with their best judgment on such matter.

 

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THE MERGER

General

On November 5, 2019, the Taylor Morrison Board and the William Lyon Homes Board each approved the merger agreement, a copy of which is attached as Annex A to this joint proxy statement/prospectus, and the transactions contemplated thereby.

Subject to the terms and conditions of the merger agreement, at the effective time, (i) Merger Sub will be merged with and into William Lyon Homes, with William Lyon Homes continuing as the Surviving Corporation and a wholly owned, direct subsidiary of Taylor Morrison and (ii) each share of William Lyon Homes common stock issued and outstanding immediately prior to the effective time, except for any shares (x) subject to vesting, repurchase or other lapse restriction granted under a William Lyon Homes equity plan that is outstanding immediately prior to the effective time of the merger, (y) with respect to which appraisal rights have been properly demanded in accordance with Section 262 of the DGCL, which will have the rights described in “Appraisal Rights” beginning on page 167 of this joint proxy statement/prospectus, or (z) Canceled Shares (together with the shares described in clauses (x), (y) and (z), “Excluded Shares”), will be converted into the right to receive (a) 0.8000 validly issued, fully paid and non-assessable shares of Taylor Morrison common stock and (b) $2.50 in cash, without interest; provided, that William Lyon Homes stockholders will receive cash in lieu of any fractional shares of Taylor Morrison common stock (the “Fractional Shares”). Immediately following the effective time, it is expected that, based on the number of shares of Taylor Morrison common stock and William Lyon Homes common stock issued and outstanding on November 5, 2019, the last full trading day before the public announcement of the merger, existing holders of Taylor Morrison common stock will own approximately 77% of the outstanding shares of Taylor Morrison common stock and existing holders of William Lyon Homes common stock will own approximately 23% of the outstanding shares of the Taylor Morrison common stock.

Background of the Merger

Members of senior management of each of William Lyon Homes and Taylor Morrison, and each of the William Lyon Homes Board and Taylor Morrison Board, regularly review and consider such company’s performance and operations, financial condition, and the broader homebuilding industry in the context of such company’s long-term strategic goals and plans, with the goal of enhancing value for its stockholders. Members of senior management of each of William Lyon Homes and Taylor Morrison, and each of the William Lyon Homes Board and Taylor Morrison Board, also regularly assess strategic alternatives, including comparing those alternatives against the risks it views as being associated with pursuing its strategic plan, including, among others, (i) potential future competition, including from larger companies that might have competitive advantages from their broader commercial scope and economies of scale, (ii) the risks inherent in the homebuilding sector, (iii) the challenges and risks associated with growing organically or through strategic acquisitions, and (iv) the fact that the homebuilding business is cyclical and significantly affected by changes in general and local economic conditions.

In connection with its regular review of strategic alternatives, members of senior management of William Lyon Homes and the William Lyon Homes Board also acknowledge the enhancement to deal certainty when pursuing a potential strategic transaction that would require stockholder approval if such a transaction were supported by William H. Lyon, who serves as Executive Chairman and Chairman of the William Homes Board and controls, directly and indirectly through the other Lyon Stockholders, approximately 42.7% of the voting power of the outstanding shares of William Lyon Homes common stock, and would control approximately 50.3% of the voting power of the outstanding shares of William Lyon Homes common stock if the Class B Warrant was exercised.

In connection with these activities, the William Lyon Homes Board meets from time to time in the ordinary course of business to consider and evaluate potential strategic alternatives, including business combinations,

 

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acquisitions, dispositions, stock buybacks and other potential transactions, as well as various operational strategies available to William Lyon Homes. Over the past few years, William Lyon Homes management has engaged in strategic discussions with potential strategic partners, including Taylor Morrison, but those discussions did not result in any strategic transaction involving William Lyon Homes. From time to time, members of senior management of William Lyon Homes and the William Lyon Homes Board also hold meetings with investment bankers who cover the homebuilding sector, including J.P. Morgan, to discuss the current state of affairs in the homebuilding industry, the companies participating in the industry and various strategic alternatives that may be available to William Lyon Homes. William Lyon Homes also regularly engages Latham & Watkins to act as its legal advisor, and Richards, Layton & Finger, P.A., to act as its Delaware legal advisor, in connection with such activities, based on their respective expertise in advising companies in the homebuilding industry.

Mr. Lyon and the Lyon Stockholders regularly assess their strategic alternatives with respect to their investment in William Lyon Homes, including exploring potential opportunities to acquire the remainder of the outstanding shares of William Lyon Homes common stock, and engaging in preliminary discussions with potential unaffiliated co-investors.

In November 2018, Mr. Lyon, in his capacity as a stockholder, engaged in preliminary discussions based on publicly available information with a private equity sponsor (“Company A”) to discuss its potential interest in being a co-investor with Mr. Lyon in such a strategic transaction, although no arrangements or commitments were made between the parties.

Beginning on January 30, 2019, Mr. Lyon began indicating to members of William Lyon Homes management and the William Lyon Homes Board that, in light of the recent trading price of the William Lyon Homes common stock, he may be interested in exploring a possible acquisition of the remainder of the outstanding shares of William Lyon Homes common stock, although Mr. Lyon did not communicate any further details as to his potential interest at that time. On January 30, 2019, the closing price of William Lyon Homes Class A common stock was $12.67 per share.

On March 15, 2019, Mr. Lyon contacted Matthew R. Zaist, the President and Chief Executive Officer of William Lyon Homes, to express his desire to potentially explore such a transaction with one or more unaffiliated co-investors, but noted the potential restrictions on such outreach by virtue of DGCL Section 203, which generally imposes restrictions on “business combinations” between a corporation and any “interested stockholder.” Accordingly, Mr. Lyon requested that the William Lyon Homes Board consider granting a limited waiver under DGCL Section 203 that would allow Mr. Lyon and his affiliates to engage with those parties without implicating the restrictions on business combinations under DGCL Section 203. On March 15, 2019, the closing price of William Lyon Homes Class A common stock was $15.11 per share.

On April 15, 2019, the William Lyon Homes Board held a telephonic meeting, with members of management and representatives of Latham & Watkins participating, to discuss Mr. Lyon’s meeting with Mr. Zaist and his request for a waiver under DGCL Section 203. At this meeting, Mr. Lyon described to the William Lyon Homes Board his potential interest in pursuing a possible acquisition of the remainder of the outstanding shares of William Lyon Homes common stock and formally requested a waiver under DGCL Section 203 in order to potentially pursue possible discussions with unaffiliated co-investors. Mr. Lyon confirmed that he did not intend to take any imminent action with respect to a possible strategic transaction if the waiver under DGCL Section 203 was granted, although he would potentially consider contacting potential co-investors thereafter to explore his options. Mr. Lyon then left the meeting. Following Mr. Lyon’s departure from the meeting, the representatives from Latham & Watkins provided an overview of DGCL Section 203, the legal considerations in granting a waiver thereunder, and the directors’ fiduciary duties under Delaware law. The William Lyon Homes Board discussed with management and representatives from Latham & Watkins the nature and scope of Mr. Lyon’s request, the options available to William Lyon Homes, the benefits and drawbacks of granting such a waiver, and the various alternatives and limitations that could be placed on such a waiver. The

 

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William Lyon Homes Board noted that the Limited 203 Waiver would be publicly announced, if granted. Accordingly, the William Lyon Homes Board also considered the potential impact of such an announcement, including the fact that such an announcement would likely signal to the market that William Lyon Homes is considering a potential sale, and the potential impacts on the trading price of William Lyon Homes Class A common stock, both in the short term and for the potential duration of the waiver. After deliberations, the William Lyon Homes Board authorized William Lyon Homes management and Latham & Watkins to prepare a proposed limited waiver under DGCL Section 203 (the “Limited 203 Waiver”). On April 15, 2019, the closing price of William Lyon Homes Class A common stock was $16.24 per share.

On April 17, 2019, Mr. Zaist met in person with the Chief Executive Officer of a public homebuilding company with whom William Lyon Homes had had strategic discussions in the past (“Company B”). The Chief Executive Officer of Company B and Mr. Zaist discussed the homebuilding industry generally, and the recent respective performances of Company B and William Lyon Homes. During the course of this conversation, the Chief Executive Officer of Company B indicated to Mr. Zaist that Company B may have interest in recommencing discussions with William Lyon Homes regarding a potential strategic transaction. Mr. Zaist and the Chief Executive Officer of Company B agreed to further discuss the matter following the respective upcoming earnings releases of the companies in May. No specific terms or conditions of any such potential transaction were discussed at that time. Following the meeting, Mr. Zaist contacted certain members of the William Lyon Homes Board, including the Lead Independent Director, to inform them of the meeting, and they expressed support for entering into a customary confidentiality and standstill agreement with Company B to facilitate further discussions.

On May 1, 2019, following discussions with Mr. Lyon as to the proposed scope and conditions of the Limited 203 Waiver, the William Lyon Homes Board agreed to grant Mr. Lyon and his affiliates the Limited 203 Waiver, which, subject to certain limitations, would permit Mr. Lyon and his affiliates, for up to 12 months (subject to extension for up to 6 months if Mr. Lyon entered into a written agreement with a potential co-investor), to discuss a potential take-private transaction with one or more unaffiliated co-investors without triggering the anti-takeover provisions under DGCL Section 203, provided that (i) Mr. Lyon and his affiliated entities simultaneously entered into a customary confidentiality and standstill agreement with William Lyon Homes, (ii) Mr. Lyon and his affiliated entities would be prohibited from entering into any agreement or arrangement with any unaffiliated co-investor without the William Lyon Homes Board’s prior approval, and (iii) any such co-investor would be required to enter into a customary confidentiality and standstill agreement. That same day, in connection with the William Lyon Homes Board’s grant of the Limited 203 Waiver, Mr. Lyon executed a customary confidentiality and standstill agreement with William Lyon Homes. On May 1, 2019, the closing price of William Lyon Homes Class A common stock was $17.26 per share.

On the evening of May 1, 2019, Mr. Lyon filed an amendment to his Schedule 13D, which described the Limited 203 Waiver and the entry into the confidentiality and standstill agreement. Before the market opened on May 2, 2019, William Lyon Homes issued a press release announcing its financial results for the three months ended March 31, 2019, which release also disclosed the Limited 203 Waiver. On May 2, 2019, the closing price of William Lyon Homes Class A common stock was $19.74 per share.

From May through the announcement of the execution of the Exclusivity Agreement described below, Mr. Lyon continued to evaluate his potential strategic alternatives, including engaging in preliminary discussions with potential unaffiliated co-investors, including Company A and another private company (“Company C”), but Mr. Lyon did not request from the William Lyon Homes Board the approval of any potential unaffiliated co-investors pursuant to the Limited 203 Waiver.

On May 8, 2019, following further discussions between representatives of Company B and William Lyon Homes, William Lyon Homes entered into a customary confidentiality and standstill agreement (which included customary fall-away rights with respect to the standstill provisions) with Company B, effective as of April 17, 2019, in order to facilitate further preliminary discussions between Company B and William Lyon Homes and

 

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the exchange of preliminary business diligence between the two companies. In connection with the execution of the confidentiality agreement, representatives of Company B and Mr. Zaist engaged in several high-level conversations with respect to a potential transaction between Company B and William Lyon Homes, and each of William Lyon Homes and Company B provided to the other company limited preliminary business due diligence.

On May 14, 2019, the William Lyon Homes Board held a regularly scheduled telephonic meeting, with members of management and representatives of Latham & Watkins participating. In executive session, after Mr. Lyon recused himself from the meeting, Mr. Zaist provided an update with respect to the discussions with Company B, and confirmed that Mr. Lyon had not yet requested from the William Lyon Homes Board the approval of any potential unaffiliated co-investors pursuant to the Limited 203 Waiver.

On May 16, 2019, the Chief Executive Officer of Company B presented to Mr. Zaist a verbal non-binding preliminary indication of interest to purchase all of the outstanding shares of William Lyon Homes common stock in exchange for shares of common stock of Company B, in an all-stock transaction, at an exchange ratio reflecting an implied value of $25.00 per share, subject to due diligence and based on certain assumptions regarding value and achievable synergies (the “Company B Indication of Interest”). On such date, the closing price of William Lyon Homes Class A common stock was $19.41 per share.

On May 21, 2019, the William Lyon Homes Board held a telephonic meeting, with members of management and representatives of Latham & Watkins participating, to discuss the Company B Indication of Interest. After reviewing and considering the terms of the Company B Indication of Interest, members of management provided a summary of the financial profile of Company B, including its historical performance, culture and future prospects, as well as a history of William Lyon Homes’ previous strategic discussions with Company B. Representatives from Latham & Watkins then provided an overview of the directors’ fiduciary duties under Delaware law. Following discussions, the William Lyon Homes Board expressed certain concerns regarding the Company B Indication of Interest, including (i) that, in its prior strategic discussions with Company B, Company B had similarly initiated discussions based on an oral indication of valuation, but had later significantly reduced that valuation following due diligence, (ii) that Company B did not have extensive experience with large-scale or public mergers and acquisitions, (iii) the potential integration and retention risks related to a potential transaction with Company B, (iv) that the proposed consideration consisted solely of common stock of Company B, (v) the overall value of the proposed consideration of common stock of Company B compared to the then-current book value of Company B’s assets and (vi) William Lyon Homes’ stand-alone business prospects at that time. At the conclusion of the William Lyon Homes Board’s discussion of the Company B Indication of Interest, Mr. Lyon also indicated that he, in his capacity as a stockholder, shared those concerns and would not be willing to support the Company B Indication of Interest for similar reasons. Mr. Lyon then left the meeting. The William Lyon Homes Board further discussed the existence of the Limited 203 Waiver and the potential challenges in obtaining stockholder approval of a potential strategic transaction without the support of Mr. Lyon. Based on the foregoing considerations and following further discussions, the William Lyon Homes Board authorized management to inform Company B that it would be unwilling to proceed with a potential transaction at the proposed valuation contemplated by the Company B Indication of Interest at that time.

Later that evening, Mr. Zaist met in person with the Chief Executive Officer of Company B and communicated that the William Lyon Homes Board was not interested in pursuing further discussions with Company B at that time based on the terms of the Company B Indication of Interest.

On May 30, 2019, Sheryl Palmer, the Chief Executive Officer of Taylor Morrison, and Mr. Zaist, who meet from time-to-time in the ordinary course, met in person during a homebuilding conference in San Francisco. During that meeting, Ms. Palmer and Mr. Zaist discussed, among other matters, consolidation in the homebuilding industry generally, including Taylor Morrison’s experience with its recent acquisition of another public homebuilder. Ms. Palmer explained that the integration of that acquisition was largely complete, and expressed interest in discussing a potential strategic transaction with William Lyon Homes. Mr. Zaist and

 

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Ms. Palmer agreed to schedule a meeting in the following weeks to further discuss the matter. Following the meeting, Mr. Zaist contacted certain members of the William Lyon Homes Board, including the Lead Independent Director, to inform them of his discussions with Ms. Palmer, and they expressed support for Mr. Zaist to continue those discussions.

On June 20, 2019, representatives of Company B verbally communicated to representatives of William Lyon Homes that they remained interested in a potential strategic transaction with William Lyon Homes in an all-stock transaction, at the same implied exchange ratio as the Company B Indication of Interest. On June 20, 2019, the closing price of William Lyon Homes Class A common stock was $19.34 per share.

On July 2, 2019, Ms. Palmer and Mr. Zaist met in person to continue their discussions regarding exploring a potential strategic transaction with William Lyon Homes, including the potential strategic rationale, cultural aspects and structure, but without discussing potential valuations or price. During this meeting, Ms. Palmer requested to have an informal follow-up meeting with Mr. Zaist and Mr. Lyon later in the month to further discuss the potential advantages of a strategic transaction between the two companies. Mr. Zaist conveyed that, although William Lyon Homes was not conducting a formal process with respect to a potential strategic transaction at this time, the William Lyon Homes’ management team would consider the request and respond once they had discussed the matter with the William Lyon Homes Board.

On July 3, 2019, the William Lyon Homes Board held a telephonic meeting, with members of management and representatives of Latham & Watkins participating, to discuss management’s recent discussions with representatives of Company B and Taylor Morrison. Mr. Zaist provided an update regarding the recent discussions with representatives of Company B, and the William Lyon Homes Board revisited the topics and concerns raised during its May 21st meeting (including the fact that the proposed consideration had not meaningfully improved from the Company B Indication of Interest, the overall value of the proposed consideration of common stock of Company B compared to the then-current book value of Company B’s assets, and William Lyon Homes’ prior strategic discussions with Company B), and Mr. Lyon reiterated his continued lack of support in his capacity as a stockholder for a potential strategic transaction with Company B. Mr. Zaist then provided an update on the potential interest from Taylor Morrison regarding a possible strategic transaction, and led discussions regarding the potential strategic rationale for such a transaction, including potential synergies, cultural fit, geographic considerations and the future prospects of Taylor Morrison. Mr. Zaist then described Ms. Palmer’s request to meet informally with both him and Mr. Lyon. Mr. Lyon indicated that he would be willing to participate in such a meeting. The William Lyon Homes Board authorized Mr. Zaist and Mr. Lyon to participate in the meeting. Mr. Lyon then left the meeting. Following Mr. Lyon’s departure from the meeting, the William Lyon Homes Board further discussed the potential strategic transactions with Company B and Taylor Morrison, and instructed management to forgo further discussions with Company B at this time in light of the concerns regarding a potential strategic transaction with Company B and to focus on William Lyon Homes’ strategic plan and its discussions with Taylor Morrison.

Following that meeting, Mr. Zaist communicated to the Chief Executive Officer of Company B that the William Lyon Homes Board was not interested in pursuing further discussions with Company B regarding a potential strategic transaction at that time upon the proposed terms.

On July 17, 2019 Mr. Zaist and Ms. Palmer spoke by telephone to further discuss Taylor Morrison’s potential acquisition of William Lyon Homes.

On July 28, 2019, Ms. Palmer, Mr. Zaist and Mr. Lyon participated in an informal meeting to discuss the potential cultural fit between William Lyon Homes and Taylor Morrison, as well as the potential benefits to be realized from the increased size and scale of a combined company. On July 29, 2019, Ms. Palmer and Mr. Zaist spoke by telephone to further discuss these topics. On July 31, 2019, Taylor Morrison and William Lyon Homes executed a customary confidentiality and standstill agreement (which included customary fall-away rights with respect to the standstill provisions) in order to permit the parties to perform due diligence with respect to a potential transaction.

 

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On August 1, 2019, Ms. Palmer and Mr. Zaist met in person to discuss Taylor Morrison’s proposed indicative terms for a potential acquisition of William Lyon Homes by Taylor Morrison. On August 5, 2019, a representative of Taylor Morrison sent to a representative of William Lyon Homes a non-binding preliminary indication of interest, which contemplated an acquisition of all of the outstanding shares of William Lyon Homes common stock, of which 85-90% would be payable in Taylor Morrison common stock and 10-15% would be payable in cash, but did not include a proposed purchase price, but indicated that the price would reflect a market premium to the unaffected trading price of William Lyon Homes Class A common stock based on a trailing VWAP to be determined (the “August 5 Indication of Interest”). The August 5 Indication of Interest also indicated that one current member of the William Lyon Homes Board would be appointed to the combined company’s board of directors, and that the proposed transaction would be contingent upon the completion of customary due diligence, the entry by Mr. Lyon and his affiliates into a voting agreement in support of the proposed transaction, and negotiation of mutually acceptable definitive transaction documents containing customary terms and conditions. In connection with the August 5 Indication of Interest, Taylor Morrison also requested that William Lyon Homes enter into a 60-day exclusivity agreement pursuant to which neither William Lyon Homes nor Mr. Lyon could participate in discussions regarding a potential strategic transaction with any other potential third-party bidders.

On August 7, 2019, the William Lyon Homes Board held a telephonic meeting, with members of management and representatives of Latham & Watkins participating, to discuss the August 5 Indication of Interest. Following discussions of the proposed terms of the August 5 Indication of Interest, the William Lyon Homes Board discussed further the potential strategic rationale for a transaction with Taylor Morrison, including potential synergies, cultural fit, geographic considerations, the then-current price of Taylor Morrison common stock relative to the book value of its assets, and the future prospects of Taylor Morrison, as well as other potential bidders that may be interested in a potential strategic transaction with William Lyon Homes, and the future prospects of William Lyon Homes on a stand-alone basis. The William Lyon Homes Board noted that, despite the public announcement of the Limited 203 Waiver, no other potential bidders, other than Company B, had contacted William Lyon Homes regarding a potential strategic transaction, and Mr. Lyon’s unwillingness, in his capacity as a stockholder, to support a transaction with Company B on the terms included in the Company B Indication of Interest. As part of these discussions, Mr. Lyon also expressed his support of the strategic rationale for a transaction with Taylor Morrison. He also confirmed that he, in his capacity as a stockholder, would be willing to consider a transaction with Taylor Morrison. At that meeting, the William Lyon Homes Board also authorized management to engage J.P. Morgan to act as its financial advisor in connection with William Lyon Homes’ consideration of strategic alternatives, based on its history with William Lyon Homes and its expertise in advising companies in the homebuilding industry. The William Lyon Homes Board instructed management to continue its discussions with Taylor Morrison and to encourage Taylor Morrison to submit a revised indication of interest that reflected a proposed valuation.

Following that meeting, Mr. Zaist contacted Ms. Palmer to indicate that the William Lyon Homes Board would be interested in further discussions regarding a potential strategic transaction with Taylor Morrison, but would not be prepared to react to the August 5 Indication of Interest without a proposed purchase price. Mr. Zaist confirmed that William Lyon Homes would be prepared to provide preliminary business due diligence to Taylor Morrison to help facilitate its valuation of William Lyon Homes. Ms. Palmer indicated that she would seek to provide an updated indication of interest following the next regularly scheduled meeting of the Taylor Morrison Board later in August.

Also on August 7, 2019, Mr. Lyon was contacted by a representative of Company C to engage in preliminary discussions regarding Company C’s interest in becoming a potential co-investor in an acquisition of the remainder of the outstanding shares of William Lyon Homes common stock. Mr. Lyon informed the representative of Company C that he was not prepared to discuss the matter at this time, but suggested that Company C consider reviewing the publicly available information regarding William Lyon Homes, and, if Company C remained interested, to contact Mr. Lyon again in the future.

 

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During August 2019, William Lyon Homes provided information to, and responded to questions from, representatives of Taylor Morrison to facilitate Taylor Morrison’s valuation analysis of William Lyon Homes.

On August 29, 2019, the Taylor Morrison Board held a regularly scheduled telephonic meeting, with members of management and representatives of Citi, Taylor Morrison’s financial advisor, and Paul, Weiss, Taylor Morrison’s legal advisor, participating. Members of Taylor Morrison management reviewed with the Taylor Morrison Board the progress of Taylor Morrison management’s evaluation of the potential acquisition of William Lyon Homes. The Taylor Morrison Board, together with Taylor Morrison management and Taylor Morrison’s external advisors, conducted an extensive discussion of the strategic rationale of a potential acquisition of William Lyon Homes as well as the risks of a potential acquisition of William Lyon Homes. This discussion included an overview and preliminary financial analysis of the potential transaction. Following a discussion of the potential revised financial terms that Taylor Morrison might offer to William Lyon Homes, the Taylor Morrison Board authorized Taylor Morrison management to send William Lyon Homes a revised non-binding indication of interest, which updated the August 5 Indication of Interest to contemplate a proposed acquisition of all of the outstanding shares of William Lyon Homes common stock for $22.50 per share, of which 90% would be payable in Taylor Morrison common stock and 10% would be payable in cash, based upon an exchange ratio for the stock component of the consideration to be fixed and determined shortly before entering into the definitive documentation related to the proposed transaction (the “August 30 Indication of Interest”).

On August 30, 2019, William Lyon Homes received the August 30 Indication of Interest from representatives of Taylor Morrison, which included proposed terms of an exclusivity agreement. On August 30, 2019, the closing price of William Lyon Homes Class A common stock was $17.67 per share, and the closing price of Taylor Morrison common stock was $23.86 per share.

On that same day, at the direction of the Taylor Morrison Board, representatives from Citi called representatives from J.P. Morgan to discuss the August 30 Indication of Interest and the strategic rationale behind the potential transaction. Representatives of Citi reiterated Taylor Morrison’s request for exclusivity and indicated that Taylor Morrison would not be willing to participate in a sale process for William Lyon Homes.

On September 4, 2019, the William Lyon Homes Board held a telephonic meeting, with members of management and representatives of Latham & Watkins and J.P. Morgan participating, to discuss the August 30 Indication of Interest. After reviewing the terms of the August 30 Indication of Interest, J.P. Morgan previewed with the William Lyon Homes Board preliminary market-based financial analyses of William Lyon Homes, Taylor Morrison, the pro forma combined company and the proposed transaction. The William Lyon Homes Board also discussed with management the strategic rationale of a potential transaction with Taylor Morrison, including Taylor Morrison’s historical performance, reputation, culture, and prospects, as well as the then-current price of Taylor Morrison common stock relative to the book value of its assets. The William Lyon Homes Board also discussed with its advisors the considerations related to a transaction that contemplated consideration that would be primarily stock, including timing, due diligence, approvals (including stockholder approvals from both William Lyon Homes and Taylor Morrison), securities laws requirements, risks, liquidity, deal certainty and potential price protections. Prior to leaving the meeting, Mr. Lyon indicated that he would be supportive of a strategic transaction with Taylor Morrison, in his capacity as a stockholder and would be willing to consider receiving Taylor Morrison common stock as consideration in that transaction. Mr. Lyon then left the meeting, and J.P. Morgan previewed further financial analyses regarding the potential transaction and the pro forma combined company. Following deliberations, the William Lyon Homes Board determined that, while it would not be prepared to enter into exclusivity with Taylor Morrison on the terms of the August 30 Indication of Interest, it authorized management and its advisors to prepare a proposed counterproposal for consideration by the William Lyon Homes Board, including with respect to an increased price, a low termination fee and appropriate deal protections. On September 4, 2019, the closing price of William Lyon Homes Class A common stock was $17.33 per share, and the closing price of Taylor Morrison common stock was $24.40 per share.

 

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On September 5, 2019, following discussions with members of William Lyon Homes management and the William Lyon Homes Board and in light of recent developments and the existence of the Limited 203 Waiver, Mr. Lyon agreed to recuse himself from the September 6th meeting of the William Lyon Homes Board.

On September 6, 2019, the William Lyon Homes Board held a telephonic meeting, without Mr. Lyon present and with members of management and representatives of Latham & Watkins and J.P. Morgan participating, to discuss the terms of the counterproposal prepared by management and its advisors. Following deliberations, the William Lyon Homes Board authorized management and its advisors to deliver to Taylor Morrison a revised non-binding proposal, reflecting, among other things, an increase in the purchase price to $23.75 per share, payable 90% in Taylor Morrison common stock and 10% in cash, an increase in the number of William Lyon Homes’ directors to be appointed to the combined company’s board of directors to two (with such directors to be selected by William Lyon Homes) and to propose a termination fee payable by William Lyon Homes in connection with a superior proposal or change of recommendation equal to 1.5% of the equity valuation of William Lyon Homes (the “September 6 Proposal”). In connection with the September 6 Proposal, the William Lyon Homes Board also instructed management and its advisors to seek to negotiate for a more limited exclusivity period. On September 6, 2019, the closing price of William Lyon Homes Class A common stock was $17.97 per share, and the closing price of Taylor Morrison common stock was $24.25 per share.

Later that day, Mr. Zaist contacted Ms. Palmer to communicate orally the terms of the September 6 Proposal, which was subsequently delivered in writing by representatives of J.P. Morgan to representatives of Citi.

On September 7, 2019, William Lyon Homes delivered to Taylor Morrison a revised draft of the proposed terms of the exclusivity agreement.

On September 9, 2019, at the direction of the Taylor Morrison Board, representatives of Citi delivered to representatives of J.P. Morgan a revised non-binding indication of interest, reflecting, among other things, a purchase price of $23.50, payable 90% in Taylor Morrison common stock and 10% in cash, based upon an exchange ratio for the stock component of the consideration to be fixed and determined shortly before entering into the definitive documentation related to the proposed transaction, two directors from the William Lyon Homes Board (to be mutually agreed upon by Taylor Morrison and William Lyon Homes) being appointed to the combined company’s board of directors, and a termination fee payable by William Lyon Homes equal to 2% of the equity valuation of William Lyon Homes (the “September 9 Indication of Interest”). Representatives of William Lyon Homes, Taylor Morrison and Mr. Lyon, in his capacity as a stockholder, also further negotiated the proposed terms of the exclusivity agreement, which resulted in a proposal that the exclusivity period would expire on October 31, 2019, subject to Taylor Morrison’s written non-binding reaffirmation to William Lyon Homes of the purchase price described in the September 9 Indication of Interest on October 7, 2019, and subject to certain termination rights in connection with William Lyon Homes’ receipt of an unsolicited superior proposal (the “Exclusivity Agreement”).

On September 10, 2019, in light of recent developments and the existence of the Limited 203 Waiver, Mr. Lyon formally agreed to waive his right to attend any meetings or discussions of the William Lyon Homes Board related to the evaluation and consideration of potential strategic alternatives of the William Lyon Homes Board to the extent the William Lyon Homes Board deemed it necessary or appropriate for him not to attend such meetings or discussions.

On September 11, 2019, the William Lyon Homes Board held a telephonic meeting, without Mr. Lyon present and with members of management and representatives of Latham & Watkins and J.P. Morgan participating, to discuss the terms of the September 9 Indication of Interest and the Exclusivity Agreement. After reviewing the terms of the September 9 Indication of Interest and the Exclusivity Agreement, including updated preliminary financial analyses provided by J.P. Morgan related to William Lyon Homes, Taylor Morrison and the proposed transaction based on the revised purchase price, the William Lyon Homes Board further discussed the strategic rationale and benefits of a transaction with Taylor Morrison, as well as the risks associated with a

 

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transaction in which the consideration was primarily stock and with entering into a limited exclusivity period with Taylor Morrison. The William Lyon Homes Board specifically weighed the benefits of entering into an exclusivity agreement with Taylor Morrison in order to incentivize more meaningful engagement by Taylor Morrison against the risks, including assessing the likelihood of other possible bidders submitting proposals during the exclusivity period and Taylor Morrison’s stated unwillingness to participate in a sale process. The William Lyon Homes Board noted that there had been no further discussions with Company B, and that Mr. Lyon, in his capacity as a stockholder, had previously stated that he would not be willing to support a transaction with Company B on the terms included in the Company B Indication of Interest. The William Lyon Homes Board also noted that Mr. Lyon had not requested from the William Lyon Homes Board the approval of any potential unaffiliated co-investors pursuant to the Limited 203 Waiver. Management also discussed with the William Lyon Homes Board the proposed size of the termination fee payable by William Lyon Homes, as well as the implications of the timing of the proposed exclusivity period, noting that the transaction would likely be announced prior to, or concurrently with, William Lyon Homes’ third quarter results, but after Taylor Morrison’s third quarter results. Mr. Zaist confirmed that Mr. Lyon, in his capacity as stockholder, indicated that he would be supportive of the terms of the September 9 Indication of Interest, subject to William Lyon Homes’ further due diligence on Taylor Morrison, and would be willing to sign the Exclusivity Agreement, in his capacity as stockholder, on the proposed terms. Following further discussions, the William Lyon Homes Board approved the Exclusivity Agreement, authorized management to execute the Exclusivity Agreement on behalf of William Lyon Homes, to further engage in due diligence, and to continue negotiations on key transaction terms.

On September 13, 2019, William Lyon Homes, Taylor Morrison and Mr. Lyon, in his capacity as stockholder, executed the Exclusivity Agreement, to be effective on September 16, 2019. On September 13, 2019, the closing price of William Lyon Homes Class A common stock was $19.46 per share, and the closing price of Taylor Morrison common stock was $24.39 per share.

Commencing on September 13, 2019 and continuing through the announcement of the execution of the merger agreement, William Lyon Homes, Taylor Morrison and their respective advisors continued to engage in business and legal due diligence on their respective counterparties, including several in-person and telephonic meetings, site visits, a review of publicly available information and information provided on their respective virtual data rooms. Also during this period, William Lyon Homes management (other than Mr. Lyon) provided regular updates to the members of the William Lyon Homes Board (other than Mr. Lyon) and the members of the William Lyon Homes Board provided guidance and instruction to the members of William Lyon Homes management on various matters, including with respect to due diligence, negotiations, and strategy. Taylor Morrison management also provided regular updates to the members of the Taylor Morrison Board and the members of the Taylor Morrison Board provided guidance and instruction to the members of Taylor Morrison management on various matters, including with respect to due diligence, negotiations and strategy.

On September 27, 2019, representatives of Taylor Morrison delivered an initial draft of the definitive merger agreement to representatives of William Lyon Homes.

On October 7, 2019, the Taylor Morrison Board held a telephonic meeting, with members of management and representatives of Paul, Weiss and Citi participating, to discuss the due diligence process to date, the deadline under the Exclusivity Agreement to reaffirm value, the treatment of the Class B Warrant in the proposed transaction and the status of the negotiations generally. Representatives of Citi also discussed recent market trends, including the historical changes in the relative trading prices of William Lyon Homes Class A common stock and Taylor Morrison common stock, and the impact of those changes on the implied value represented by the September 9 Indication of Interest. Following these discussions, the Taylor Morrison Board authorized Taylor Morrison management to reaffirm support for the proposed purchase price described in the September 9 Indication of Interest on a non-binding basis.

Later that day, representatives of Taylor Morrison delivered a written, non-binding reaffirmation to William Lyon Homes confirming Taylor Morrison’s support for the proposed purchase price described in the September 9

 

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Indication of Interest, subject to further due diligence. On October 7, 2019, the closing price of William Lyon Homes Class A common stock was $20.34 per share, and the closing price of Taylor Morrison common stock was $26.01 per share.

Throughout the month of October and early November, 2019, the respective management teams of Taylor Morrison and William Lyon Homes (other than Mr. Lyon) and representatives of Paul, Weiss and Latham & Watkins advanced the negotiation of the merger agreement. The negotiation of the merger agreement primarily focused on (i) the size of the respective termination fees payable by the parties in the event of certain termination events, (ii) the procedural limitations with respect to the ability of the William Lyon Homes Board to change its recommendation and terminate the merger agreement in accordance with its fiduciary duties, (iii) the procedural limitations with respect to the ability of Taylor Morrison to solicit potential acquisition proposals and for the Taylor Morrison Board to change its recommendation in accordance with its fiduciary duties, (iv) the financing covenants and obligations, including with respect to the structure of the marketing period, (v) the interim operating covenants to be imposed on the parties between signing and closing, and (vi) the conditions to closing.

On October 10, 2019, the William Lyon Homes Board held a telephonic meeting, without Mr. Lyon present and with members of management and representatives of Latham & Watkins and J.P. Morgan participating, to discuss Taylor Morrison’s reaffirmation of value, and the status of the negotiations, including remaining open issues, and the due diligence process to date. Mr. Zaist noted that Taylor Morrison had not yet proposed how it would treat Mr. Lyon’s Class B Warrant, but that Ms. Palmer had requested to discuss the matter directly with Mr. Lyon. The William Lyon Homes Board discussed the potential conflicts and related risks that could arise based on the potential consideration to be received by Mr. Lyon for his Class B warrants, and, following such discussions, authorized Mr. Zaist and Mr. Lyon to discuss the proposed treatment of the Class B Warrant with Ms. Palmer directly. Representatives of J.P. Morgan also discussed recent market trends, including the recent increases in the trading prices of William Lyon Homes Class A common stock and Taylor Morrison common stock since the date the Exclusivity Agreement was signed, and the impact of those changes on the implied value represented by the September 9 Indication of Interest. The William Lyon Homes Board also discussed management’s preliminary indications of William Lyon Homes’ third quarter results, which management believed would be mixed relative to analyst expectations with respect to certain key metrics. The William Lyon Homes Board also discussed the due diligence performed on Taylor Morrison to date, including Taylor Morrison’s anticipated third quarter results. The William Lyon Homes Board discussed with management and the J.P. Morgan team the benefits and drawbacks of attempting to reopen negotiations of the proposed purchase price in light of the relative changes in trading prices of William Lyon Homes Class A common stock and Taylor Morrison common stock. Following such deliberations, the William Lyon Homes Board determined to continue to monitor the relative stock prices and anticipated quarterly results of the parties as negotiations and due diligence continued to progress. On October 10, 2019, the closing price of William Lyon Homes Class A common stock was $19.74 per share, and the closing price of Taylor Morrison common stock was $25.90 per share.

On October 22, 2019, representatives of Paul, Weiss delivered an initial draft to representatives of Akin Gump Strauss Hauer & Feld LLP (“Akin Gump”), outside counsel to Mr. Lyon and certain of his affiliates, of the proposed voting agreement with respect to the shares of William Lyon Homes common stock controlled by Mr. Lyon and the other Lyon stockholders. From October 22, 2019 until the execution of the merger agreement, representatives from Paul, Weiss and Akin Gump advanced the negotiation of the voting agreement, which was primarily focused on negotiating the termination rights contained therein.

On October 23, 2019, Mr. Lyon was contacted by representatives of Company C to explore Mr. Lyon’s potential interest in re-engaging in discussions regarding its possible role as a co-investor with Mr. Lyon in a take-private transaction. Consistent with the terms of the Exclusivity Agreement, Mr. Lyon informed Company C that he was not able to discuss the matter at that time. Mr. Lyon then informed management of the communication, who in turn notified the William Lyon Homes Board.

 

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On October 24, 2019, Ms. Palmer, Mr. Zaist and Mr. Lyon met to discuss the proposed treatment of the Class B Warrant in connection with the proposed transaction. From October 24, 2019 through early November, Mr. Lyon, the management team of Taylor Morrison, and representatives of Paul, Weiss and Akin Gump advanced the negotiations as to the treatment of the Class B Warrant, pursuant to which the parties ultimately agreed that the Class B Warrant would be assumed and converted into warrants to acquire shares of Taylor Morrison common stock, applying the same conversion ratio as the ratio applied to William Lyon Homes’ outstanding stock options when converted to options to acquire shares of Taylor Morrison common stock at the closing.

On October 22, 2019 and October 25, 2019, the William Lyon Homes Board held telephonic meetings, without Mr. Lyon present and with members of management and representatives of Latham & Watkins and J.P. Morgan participating, to discuss the status of the negotiations with Taylor Morrison, including remaining open issues, due diligence, and developments with respect to negotiations regarding the treatment of the Class B Warrant. The William Lyon Homes Board also discussed the respective trading prices of William Lyon Homes Class A common stock and Taylor Morrison common stock, and the respective anticipated third quarter results for William Lyon Homes and Taylor Morrison. On October 25, 2019, the closing price of William Lyon Homes Class A common stock was $21.05 per share, and the closing price of Taylor Morrison common stock was $27.30 per share.

Also on October 25, 2019, the Taylor Morrison Board held a telephonic meeting, with members of management and representatives of Paul, Weiss and Citi participating, to receive a transaction update.

On the morning of October 30, 2019, Taylor Morrison announced its third quarter results. On October 30, 2019, the closing price of Taylor Morrison common stock was $24.61 per share.

On the afternoon of October 30, 2019, the William Lyon Homes Board held a telephonic meeting, without Mr. Lyon present and with members of management and representatives of Latham & Watkins and J.P. Morgan participating, to discuss Taylor Morrison’s earnings results, and the subsequent impact on Taylor Morrison’s stock price. J.P. Morgan reviewed with the William Lyon Homes Board the impact of the current relative stock prices on the implied value represented by the September 9 Indication of Interest. Following discussions, the William Lyon Homes Board discussed with management William Lyon Homes’ anticipated third quarter earnings, which management had shared with representatives Taylor Morrison, and its potential anticipated impact on the trading price of the William Lyon Homes Class A common stock. The William Lyon Homes Board also discussed the fact that the exclusivity period under the Exclusivity Agreement would expire on October 31, 2019, noting that a transaction, if approved, would likely be finalized in the near-term, and authorized management and its advisors to continue to negotiate with Taylor Morrison notwithstanding the expiration.

On November 1, the Taylor Morrison Board held a telephonic meeting, with members of management and representatives of Paul, Weiss and Citi participating. Members of Taylor Morrison management discussed the results of the due diligence review of William Lyon Homes that had been conducted, including the implications and risks of the potential transaction. Representatives of Citi discussed Citi’s financial analysis of the potential transaction at various exchange ratios. At this meeting, the Taylor Morrison Board authorized Taylor Morrison management to propose a fixed exchange ratio of 0.7950, plus $2.35 in cash per share.

On the evening of November 1, 2019, Ms. Palmer contacted Mr. Zaist to propose a fixed exchange ratio of 0.7950 shares of Taylor Morrison common stock plus $2.35 in cash per share, which reflected an implied aggregate value of $22.18 per share of William Lyon Homes common stock, based on the closing price of Taylor Morrison common stock on November 1, 2019. On November 1, 2019, the closing price of William Lyon Homes Class A common stock was $20.00 per share, and the closing price of Taylor Morrison common stock was $24.94 per share.

On November 3, 2019, following discussions with members of the William Lyon Homes Board (other than Mr. Lyon) and its advisors, Mr. Zaist negotiated with Ms. Palmer to increase the proposed purchase price and the

 

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reverse termination fee payable by Taylor Morrison in the event of termination of the merger agreement under certain circumstances. Following discussions with members of the Taylor Morrison Board, Ms. Palmer agreed to increase the fixed exchange ratio to 0.8000 and the cash component to $2.50. This offer reflected an implied aggregate value of $22.45 per share of William Lyon Homes common stock, based on the closing price of Taylor Morrison common stock on November 1, 2019, the last prior trading day. Taylor Morrison also agreed to increase the reverse termination fee to $40.0 million payable by Taylor Morrison in the event of termination of the merger agreement under certain circumstances. Ms. Palmer informed Mr. Zaist that this proposal reflected Taylor Morrison’s last and best offer.

On November 4, 2019, the William Lyon Homes Board held a telephonic meeting with members of management and representatives of Latham & Watkins and J.P. Morgan participating, to discuss Taylor Morrison’s revised proposal. Mr. Zaist provided an overview of the negotiations that took place over the preceding days, including Ms. Palmer’s indication that the revised proposal was Taylor Morrison’s last and best offer, and confirmed that the Class B Warrant would be assumed by Taylor Morrison. J.P. Morgan presented financial analyses and valuation based on the revised proposal, including the implied premium and the implied potential pro forma ownership of the William Lyon Homes stockholders in the combined company. Representatives from Latham & Watkins also provided an overview of the directors’ fiduciary duties under Delaware law, and summarized the status of the negotiations with respect to the merger agreement. Following discussions, the William Lyon Homes Board discussed with management, among other things, the results of William Lyon Homes’ due diligence on Taylor Morrison, the strategic benefits and risks associated with the proposed transaction and William Lyon Homes’ strategic alternatives, including on a stand-alone basis, and the recent financial performance and future prospects of William Lyon Homes and Taylor Morrison, as well as the then-current price of Taylor Morrison common stock relative to the book value of its assets, William Lyon Homes’ pending third quarter earnings announcement and the potential market reaction thereto. The William Lyon Homes Board then discussed potential alternative bidders, including Company B, and whether a better price could be achieved by engaging with such parties, or any other potential bidders. During the course of this discussion, members of the William Lyon Homes Board noted that any other bidder would likely require a meaningful period of time to complete its due diligence investigation with respect to William Lyon Homes, the risk that any bidder, including Taylor Morrison, may reduce the price it would be willing to pay in a potential transaction following William Lyon Homes’ earnings release, and the likelihood that Taylor Morrison would be unwilling to delay execution of definitive documentation for a significant period of time. In addition, the William Lyon Homes Board noted that the proposed termination fee payable by William Lyon Homes in the event of a change in recommendation or the entry into a superior proposal was $18.0 million, which the William Lyon Homes Board believed would not be preclusive of a potential third-party bidder submitting an alternative proposal. Following deliberations, Mr. Lyon, in his capacity as a stockholder, confirmed that he was supportive of the proposed transaction with Taylor Morrison on the terms of the revised proposal, and would be prepared to sign a voting agreement, subject to prior approval of the William Lyon Homes Board. Mr. Lyon then left the meeting. J.P. Morgan then presented supplemental financial analyses and valuation based on the revised proposal. Following further discussions, the William Lyon Homes Board concluded that Taylor Morrison’s revised proposal represented a better overall value for William Lyon Homes’ stockholders than its strategic alternatives and that Taylor Morrison’s revised proposal represented the best transaction reasonably available to William Lyon Homes’ stockholders, and authorized management and its advisors to finalize negotiations of the definitive agreements.

Between November 4, 2019 and November 5, 2019, representatives of William Lyon Homes, Taylor Morrison, and their respective counsel finalized the transaction documentation, including the merger agreement, and Mr. Lyon, representatives of Taylor Morrison and their respective counsel finalized the voting agreement, subject in each case to prior approval from the respective boards of directors of William Lyon Homes and Taylor Morrison. During that time, representatives of William Lyon Homes also contacted certain key joint venture partners of William Lyon Homes (who were subject to customary confidentiality obligations) to solicit their written consent and approval of the proposed transaction with Taylor Morrison, which such partners delivered prior to the meeting of the William Lyon Homes Board on November 5, 2019. On November 5, 2019, the closing

 

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price of William Lyon Homes Class A common stock was $18.40 per share, and the closing price of Taylor Morrison common stock was $23.69 per share.

On November 5, 2019, the Taylor Morrison Board held a telephonic meeting, with members of management and representatives of Paul, Weiss and Citi participating. Management and representatives of Paul, Weiss provided the Taylor Morrison Board with an update on the recent negotiations and discussions with William Lyon Homes, including with respect to the voting agreement and the treatment of the Class B Warrant. Representatives of Citi reviewed with the Taylor Morrison Board their financial analysis relating to the fairness, from a financial point of view, to Taylor Morrison of the exchange ratio set forth in the merger agreement, taking into account the Cash Consideration to be paid by Taylor Morrison pursuant to the merger agreement, and Citi then rendered to the Taylor Morrison Board an oral opinion, confirmed by delivery of a written opinion, dated November 5, 2019, to the effect that, as of that date and based on and subject to various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken by Citi as set forth in its written opinion, the exchange ratio, taking into account the Cash Consideration per share of William Lyon Homes common stock to be paid by Taylor Morrison pursuant to the merger agreement, was fair, from a financial point of view, to Taylor Morrison, as more fully described under the heading “The Merger—Opinion of Taylor Morrison’s Financial Advisor, Citi” beginning on page 78 of this joint proxy statement/prospectus. Also at this meeting, representatives from Paul, Weiss reviewed key terms of the proposed merger agreement and reviewed with the members of the Taylor Morrison Board their fiduciary duties in the context of the proposed transaction. The Taylor Morrison Board again reviewed the advantages and disadvantages of the proposed transaction, including those described in “—Taylor Morrison’s Reasons for the Merger; Recommendation of the Taylor Morrison Board of Directors” beginning on page 69 of this joint proxy statement/prospectus. The Taylor Morrison Board, following deliberations with management and its advisors, and in light of the reasons considered, unanimously (i) approved, adopted, and declared advisable the merger agreement and the other transactions contemplated by the merger agreement, including the merger and the Share Issuance, (ii) directed that the Share Issuance be submitted to the Taylor Morrison stockholders for approval at the Taylor Morrison special meeting and (iii) resolved to recommend that the Share Issuance be approved by the Taylor Morrison stockholders.

In the afternoon of November 5, 2019, the William Lyon Homes Board held a telephonic meeting, without Mr. Lyon initially present and with members of management and representatives of Latham & Watkins and J.P. Morgan participating. Management and representatives of Latham & Watkins provided the William Lyon Homes Board with an update on the recent negotiations and discussions with Taylor Morrison, including with respect to the voting agreement and the treatment of the Class B Warrant. Mr. Lyon then joined the meeting. Representatives of J.P. Morgan summarized the interactions with Taylor Morrison to date and reviewed with the William Lyon Homes Board its financial analyses relating to the consideration proposed in the potential merger. Also at this meeting, a representative from Latham & Watkins reviewed key terms of the proposed merger agreement and reviewed with members of the William Lyon Homes Board their fiduciary duties in the context of the proposed transaction. The Latham & Watkins representative also reviewed the proposed resolutions with the William Lyon Homes Board. The William Lyon Homes Board again reviewed the advantages and disadvantages of the proposed transaction, including those discussed at the William Lyon Homes Board’s meeting of November 4, 2019, as well as those described in “—William Lyon Homes’ Reasons for the Merger; Recommendation of the William Lyon Homes Board of Directors” beginning on page 72 of this joint proxy statement/prospectus. Representatives from J.P. Morgan then delivered to the William Lyon Homes Board an oral opinion, which was confirmed by delivery of a written opinion dated November 5, 2019, to the effect that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the consideration to be paid to the holders of shares of William Lyon Homes common stock in the proposed Merger was fair, from a financial point of view, to such holders, as more fully described under the heading “The Merger—Opinion of William Lyon Homes’ Financial Advisor, J.P. Morgan” beginning on page 87 of this joint proxy statement/prospectus. The William Lyon Homes Board, following deliberations with management and its advisors, and in light of the reasons considered, unanimously (i) determined that the transactions contemplated by the merger agreement, including the merger, are advisable, fair and in the best interests of William Lyon Homes’

 

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stockholders, (ii) approved, adopted and declared advisable the merger agreement and the transactions contemplated thereby, (iii) authorized the execution, delivery and performance thereof, and (iv) resolved to recommend that the William Lyon Homes stockholders approve the merger agreement.

Following the conclusion of the William Lyon Homes Board meeting, William Lyon Homes, Taylor Morrison, Mr. Lyon and their respective counsel facilitated the execution of the merger agreement and the voting agreement, and Taylor Morrison executed its debt commitment papers with Citi.

William Lyon Homes and Taylor Morrison jointly announced the execution of the merger agreement on the morning of November 6, 2019. William Lyon Homes also reported its third quarter earnings that same morning.

Taylor Morrison’s Reasons for the Merger; Recommendations of the Taylor Morrison Board

At a meeting on November 5, 2019, the Taylor Morrison Board unanimously (i) determined that the merger agreement is advisable, fair to and in the best interests of Taylor Morrison’s stockholders, (ii) adopted resolutions approving the execution of, and performance by Taylor Morrison of its obligations under, the merger agreement and declaring the advisability of the merger agreement and (iii) adopted resolutions recommending that the holders of Taylor Morrison common stock approve the Share Issuance in connection with the merger.

THE TAYLOR MORRISON BOARD RECOMMENDS THAT TAYLOR MORRISON STOCKHOLDERS VOTE “FOR” THE SHARE ISSUANCE PROPOSAL AND “FOR” THE TAYLOR MORRISON ADJOURNMENT PROPOSAL.

In evaluating the merger agreement and the transactions contemplated by the merger agreement, the Taylor Morrison Board consulted with its legal and financial advisors and with Taylor Morrison’s management. In reaching its determinations and recommendations to the Taylor Morrison stockholders, the Taylor Morrison Board considered a number of factors, including but not limited to the following factors (which are not necessarily in order of importance):

Strategic Considerations. The Taylor Morrison Board believes that the merger presents, and is expected to provide, a number of significant strategic opportunities and benefits to Taylor Morrison and its stockholders, including the following:

 

   

the strategic nature of the merger, combining the portfolio of one of the nation’s largest homebuilders in the Western United States with the portfolio of Taylor Morrison to develop a leading national homebuilding company with a presence in 23 markets across the United States;

 

   

the belief that the combined company’s scale will meaningfully advance its financial profile by leveraging nationwide reach and local presence, enabling the combined company to have greater potential to grow faster and more efficiently than either Taylor Morrison or William Lyon Homes could on a standalone basis;

 

   

the expectation that the merger is anticipated to result in synergies across the combined company of approximately $80.0 million annually;

 

   

the merger will give Taylor Morrison a top five market share position in 16 of the 23 markets in which the combined company will operate, which will enable Taylor Morrison to have greater access to land and labor, leading to greater efficiencies and opportunities;

 

   

the merger will provide for Taylor Morrison’s entry into the Washington, Oregon and Nevada markets, which are attractive, growing markets;

 

   

the combination of Taylor Morrison and William Lyon Homes will create a stronger base of talent by uniting two workforces and will further incentivize employees of both Taylor Morrison and William Lyon Homes with benefits from greater career and professional development opportunities generated by the merger;

 

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the belief that the corporate cultures and goals of Taylor Morrison and William Lyon Homes are compatible, in that both companies are committed to quality craftsmanship and a focus on customer satisfaction, and that the merger will enable Taylor Morrison to leverage William Lyon Homes’ reputation and history; and

 

   

the combined company is expected to have a strong financial position in light of its increased scale, diversification, expected synergies and operating efficiencies.

Other Factors Considered by the Taylor Morrison Board. In addition to considering the strategic factors described above, the Taylor Morrison Board considered the following additional factors, all of which it viewed as supporting its decision to approve the merger and make its recommendations to Taylor Morrison stockholders:

 

   

the Taylor Morrison Board’s understanding of the business, operations, financial condition, earnings and prospects of Taylor Morrison and of William Lyon Homes, taking into account the results of Taylor Morrison’s due diligence review of William Lyon Homes;

 

   

the fact that the nine-member board of directors of the combined company will be comprised of the CEO of Taylor Morrison, six independent Taylor Morrison directors and two current William Lyon Homes directors, allowing for the creation of a well-rounded board of directors with complementary strengths and backgrounds;

 

   

the belief that the above-described governance matters would best position the combined company for future success and synergies realization;

 

   

the terms and conditions of the merger agreement, including the strong commitments by both Taylor Morrison and William Lyon Homes to complete the merger;

 

   

the fact that the exchange ratio under the merger agreement is fixed (i.e., it will not be adjusted for fluctuations in the market price of Taylor Morrison common stock or William Lyon Homes common stock), creating certainty as to the number of shares of Taylor Morrison common stock to be issued in connection with the merger;

 

   

the terms and conditions of the voting agreement, including the commitment by each of the Lyon Stockholders, who collectively control approximately 42.7% of the voting power of the outstanding William Lyon Homes common stock, to vote all of their shares of William Lyon Homes common stock in favor of the Merger Proposal, unless the William Lyon Homes Board changes its recommendation in favor of the Merger Proposal, in which case such stockholders will be required to vote shares of William Lyon Homes common stock equal to 30% of the outstanding voting power of William Lyon Homes common stock in favor of the Merger Proposal;

 

   

the fact that the transaction is not subject to the pre-merger notification requirement under the HSR Act and consummation of the transaction is not subject to material regulatory approvals;

 

   

the oral opinion rendered by Citi, which was confirmed by delivery of a written opinion, dated as of November 5, 2019, to the Taylor Morrison Board, at the direction of the Taylor Morrison Board, to the effect that, as of that date and based on and subject to various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken by Citi as set forth in its written opinion, the exchange ratio, taking into account the Cash Consideration, at which William Lyon Homes common stock will be exchanged for Taylor Morrison common stock in the merger pursuant to the merger agreement, was fair, from a financial point of view, to Taylor Morrison, as more fully described in the section entitled “The MergerOpinion of Taylor Morrisons Financial Advisor, Citi” beginning on page 78 of this joint proxy statement/prospectus;

 

   

the results of the due diligence review of William Lyon Homes and its business conducted by Taylor Morrison and its legal advisors;

 

   

the anticipated customer, supplier and stakeholder reaction to the merger;

 

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the anticipated market capitalization, revenues, free cash flow and capital structure of the combined company; and

 

   

the recommendation of Taylor Morrison’s senior management in favor of the transaction.

In the course of its deliberations, the Taylor Morrison Board weighed these advantages and opportunities against a variety of risks and other potentially negative factors, including but not limited to the following (which are not necessarily in order of importance):

 

   

risks and contingencies relating to the announcement and pendency of the merger, including the restrictions on the conduct of Taylor Morrison’s and William Lyon Homes’ businesses during the period between the execution of the merger agreement and the effective time as set forth in the merger agreement;

 

   

the risk of diverting resources from other strategic opportunities and from operational matters;

 

   

the possibility that the consummation of the merger might not occur, or might be delayed, despite Taylor Morrison’s and William Lyon Homes’ efforts, including by reason of a failure to obtain the approval of either Taylor Morrison stockholders or William Lyon Homes stockholders;

 

   

potential challenges and difficulties in integrating the operations of Taylor Morrison and William Lyon Homes and the risk that anticipated cost savings and operational efficiencies between the two companies, or other anticipated benefits of the merger, might not be realized or might take longer to realize than expected;

 

   

the potential that the fixed exchange ratio with respect to the Merger Consideration could result in Taylor Morrison delivering greater value to William Lyon Homes stockholders than had been anticipated by Taylor Morrison should the value of shares of Taylor Morrison common stock increase disproportionately between the date of the merger agreement and the effective time as set forth in the merger agreement;

 

   

the risk that the structure of the merger could potentially trigger termination rights of or breach certain restrictive covenants or other terms of Taylor Morrison’s and William Lyon Homes’ respective contracts with third parties;

 

   

the fact that under specified circumstances, Taylor Morrison may be required to pay William Lyon Homes a termination fee of $40.0 million if the merger agreement were to be terminated, as described further in the section entitled “The Merger Agreement—Termination of the Merger Agreement beginning on page 129 of this joint proxy statement/prospectus), and the effect this could have on Taylor Morrison, including the possibility that the existence of the termination fee obligation could discourage other potential parties from making a Superior Proposal, though the Taylor Morrison Board believes that the termination fee is reasonable in amount and would not unduly deter any other party that might be interested in making a competing proposal;

 

   

the limitations imposed in the merger agreement on the solicitation or consideration by Taylor Morrison of alternative transactions;

 

   

William Lyon Homes’ right to terminate the merger agreement to enter into a transaction representing a Superior Proposal made prior to the time William Lyon Homes stockholders adopt the merger agreement, subject to William Lyon Homes paying Taylor Morrison a termination fee of $18.0 million;

 

   

the possibility that the combined company might not achieve its projected financial results;

 

   

the risk that credit rating agencies might downgrade Taylor Morrison’s ratings or might place Taylor Morrison’s credit ratings under review for downgrade as a result of the merger or the announcement of the merger;

 

   

the risk that the additional debt incurred in connection with the merger could have a negative impact on Taylor Morrison’s ratings and operational flexibility;

 

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the fees and expenses associated with completing the merger and the other transactions contemplated by the merger agreement; and

 

   

various other risks associated with the merger and the businesses of Taylor Morrison, William Lyon Homes and the combined company described in the section entitled “Risk Factors” beginning on page 25 of this joint proxy statement/prospectus.

In addition to considering the factors described above, the Taylor Morrison Board was aware of and considered its fiduciary duties in light of all the foregoing factors.

Based on the reasons set forth above and other reasons considered, the Taylor Morrison Board concluded that the potential risks and uncertainties were outweighed by the benefits that the Taylor Morrison Board expected Taylor Morrison and its stockholders would achieve as a result of the merger, and therefore unanimously recommends that the Taylor Morrison stockholders vote “FOR” the Share Issuance Proposal and “FOR” The Taylor Morrison Adjournment Proposal.

The foregoing discussion of the factors considered by the Taylor Morrison Board is not intended to be exhaustive, but rather includes the principal factors considered by the Taylor Morrison Board. In view of the wide variety of factors considered in connection with its evaluation of the merger and the complexity of these matters, the Taylor Morrison Board did not find it useful or practicable and did not attempt to quantify or assign any relative or specific weights to the various factors that it considered in reaching its determination to approve the merger agreement and to make its recommendations to Taylor Morrison stockholders. In addition, individual members of the Taylor Morrison Board may have given differing weights to different factors. The Taylor Morrison Board conducted an overall review of the factors described above, including thorough discussions with Taylor Morrison’s management and outside legal and financial advisors. The Taylor Morrison Board further realized that there can be no assurance about future results, including results considered or expected as disclosed in the foregoing reasons. The factors, potential risks and uncertainties contained in this explanation of the Taylor Morrison Board’s reasons for the merger and other information presented in this section contain information that is forward-looking in nature and, therefore, should be read in light of the factors discussed in the section entitled “Special Note Regarding Forward-Looking Statements” beginning on page 36 of this joint proxy statement/prospectus.

In considering the recommendations of the Taylor Morrison Board, Taylor Morrison stockholders should be aware that certain directors and executive officers of Taylor Morrison may have interests in the merger that are different from, or in addition to, those of Taylor Morrison stockholders generally. The Taylor Morrison Board was aware of and carefully considered these interests, among other matters, in evaluating the terms and structure, and overseeing the negotiation, of the merger, and in reaching its determination to approve the merger agreement and to make its recommendations to Taylor Morrison stockholders. For more information on the interests of certain Taylor Morrison directors and executive officers, see the section entitled “The MergerInterests of Certain Taylor Morrison Directors and Officers in the Merger” beginning on page 107 of this joint proxy statement/prospectus.

William Lyon Homes’ Reasons for the Merger; Recommendations of the William Lyon Homes Board

At a meeting on November 5, 2019, the William Lyon Homes Board unanimously (i) determined that the merger agreement is advisable, fair to and in the best interests of William Lyon Homes’ stockholders, (ii) adopted resolutions approving the execution of, and performance by William Lyon Homes of its obligations under, the merger agreement and declaring the advisability of the merger agreement and (iii) adopted resolutions recommending that the holders of William Lyon Homes common stock approve the Merger Proposal in connection with the merger.

 

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THE WILLIAM LYON HOMES BOARD RECOMMENDS THAT WILLIAM LYON HOMES STOCKHOLDERS VOTE “FOR” THE MERGER PROPOSAL, “FOR” THE COMPENSATION PROPOSAL, AND “FOR” THE WILLIAM LYON HOMES ADJOURNMENT PROPOSAL.

In evaluating the merger agreement and the transactions contemplated by the merger agreement, the William Lyon Homes Board consulted with its legal and financial advisors and with William Lyon Homes management, and in reaching its determinations and recommendations to the William Lyon Homes stockholders, the William Lyon Homes Board considered a number of factors, including but not limited to the following factors (which are not necessarily in order of importance):

Strategic Considerations. The William Lyon Homes Board believes that the merger presents, and is expected to provide, a number of significant strategic opportunities and benefits to William Lyon Homes and its stockholders, including the following:

 

   

the advantages of entering into the merger agreement and consummating the merger in comparison to the risks associated with remaining independent as a standalone company and pursuing William Lyon Homes’ strategic plan, including (i) potential future competition, including from larger and better funded companies that might have competitive advantages from their broader commercial scope and economies of scale, (ii) the risks inherent in the homebuilding sector for William Lyon Homes, (iii) the challenges and risks associated with growing William Lyon Homes organically or through strategic acquisitions, (iv) the fact that William Lyon Homes’ business is cyclical and significantly affected by changes in general and local economic conditions, and (v) the various additional risk factors pertaining to William Lyon Homes that are listed in Item 1A of Part I of its most recent Annual Report filed on Form 10-K and, consequently, the belief of the William Lyon Homes Board that an acquisition by Taylor Morrison would provide more value for William Lyon Homes’ stockholders than executing William Lyon Homes’ standalone strategic business plan;

 

   

the potential opportunities for greater operational efficiencies and synergies through conducting William Lyon Homes’ and Taylor Morrison’s respective operations as part of a single enterprise and the expectation that the William Lyon Homes stockholders would benefit from such efficiencies and synergies, including as a result of enhanced national and local market purchasing power as a result of increased scale;

 

   

the other strategic alternatives reasonably available to William Lyon Homes, including pursuing its standalone business plan, potentially making acquisitions of other businesses, potentially monetizing certain assets, and seeking proposals from other potential acquirers, and the belief of the William Lyon Homes Board that the merger creates the most compelling available opportunity to enhance value for William Lyon Homes’ stockholders given the potential risks, rewards and uncertainties associated with other alternatives, and represents the best transaction reasonably available to William Lyon Homes’ stockholders;

 

   

the prospects of the combined company following the completion of the merger, given the William Lyon Homes Board’s knowledge of William Lyon Homes’ and Taylor Morrison’s respective business, operations, financial condition and earnings;

 

   

that remaining an independent homebuilder presents certain risks and additional costs, including the size of William Lyon Homes’ market capitalization and relatively lower trading liquidity, higher costs of capital and higher administrative costs relative to its competitors;

 

   

the strength of Taylor Morrison’s management team and Taylor Morrison’s track record of utilizing mergers and acquisitions to drive growth;

 

   

the current and prospective business climate in the industry in which William Lyon Homes and Taylor Morrison operate, including the position of current and likely competitors of William Lyon Homes and Taylor Morrison; and

 

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for the combined company, increased presence in certain markets, diversification across all markets and diversification in product offerings.

Value of the Merger Consideration. The William Lyon Homes Board also believes that the merger is attractive to William Lyon Homes stockholders, based on a number of valuation-related factors, including:

 

   

the value of the Merger Consideration to be received by William Lyon Homes stockholders in relation to (i) the market price of William Lyon Homes Class A common stock prior to the William Lyon Homes Board’s approval of the merger agreement; (ii) the market price of William Lyon Homes Class A common stock prior to the public announcement of the Limited 203 Waiver; and (iii) the value that could potentially be obtained through other strategic alternatives available to William Lyon Homes, including the attendant risk that if William Lyon Homes remained independent, William Lyon Homes Class A common stock may not trade at levels equal to or greater than the value of the Merger Consideration in the near term, over an extended period of time or at all;

 

   

that, based on the number of shares of Taylor Morrison common stock and William Lyon Homes common stock issued and outstanding on November 5, 2019, the last full trading day before the public announcement of the merger, the William Lyon Homes stockholders would own approximately 23% of the combined company, and that the Merger Consideration, comprised of a combination of cash and stock, provides William Lyon Homes stockholders with the opportunity to participate, through ownership in the combined company, in the value that the William Lyon Homes Board believes will be created as a result of the merger, as well as a degree of immediate liquidity and value to William Lyon Homes stockholders;

 

   

the fact that the implied value of the Merger Consideration was $21.45 per share, based on the $23.69 closing price per share of Taylor Morrison common stock on November 5, 2019, the last full trading day before the announcement of the merger agreement, represented an implied premium of approximately 16.6% over the closing price per share of William Lyon Homes Class A common stock on November 5, 2019, the last full trading day before the announcement of the merger agreement;

 

   

the fact that because the stock portion of the Merger Consideration is a fixed number of shares of Taylor Morrison common stock, William Lyon Homes stockholders will have the opportunity to benefit from any potential increase in the trading price of Taylor Morrison common stock pending the completion of the merger;

 

   

the financial analysis reviewed and discussed with the William Lyon Homes Board by representatives of J.P. Morgan, as well as the oral opinion of J.P. Morgan rendered to the William Lyon Homes Board on November 5, 2019 (which was subsequently confirmed by delivery of J.P. Morgan’s written opinion delivered to the William Lyon Homes Board on the same date) as to the fairness, from a financial point of view, of the Merger Consideration to be received by holders of William Lyon Homes common stock in the proposed merger as more fully described in the section entitled “—Opinion of William Lyon Homes’ Financial Advisor, J.P. Morgan” beginning on page 87 of this joint proxy statement/prospectus;

 

   

that the stock portion of the Merger Consideration received by William Lyon Homes stockholders may qualify for deferred tax treatment; and

 

   

the fact that the William Lyon Homes Board’s negotiations with Taylor Morrison resulted in increased closing certainty relative to the initial proposed terms, as well as the William Lyon Homes Board’s belief, based on Taylor Morrison’s positions during negotiations, that the final Merger Consideration provided by the merger agreement represented the maximum amount Taylor Morrison would be willing to pay and the best price and overall deal terms that were reasonably attainable by William Lyon Homes under the circumstances.

 

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Other Factors Considered by the William Lyon Homes Board. In addition to considering the strategic and economic factors described above, the William Lyon Homes Board considered the following additional factors, all of which it viewed as supporting its decision to approve the merger agreement and make its recommendations to the William Lyon Homes stockholders:

 

   

the fact that the Lyon Stockholders, who control approximately 42.7% of the voting power of the outstanding shares of William Lyon Homes common stock, entered into a voting agreement with Taylor Morrison pursuant to which they agreed to support the merger and the other transactions contemplated by the merger agreement, as more fully described under the heading “The Voting Agreement” beginning on page 133 of this joint proxy statement/prospectus;

 

   

the terms and conditions of the merger agreement, including:

 

   

the William Lyon Homes Board’s right to terminate the merger agreement in order to enter into a definitive agreement with respect to a superior proposal or to change its recommendation to its stockholders upon payment of a $18.0 million termination fee to Taylor Morrison, which the William Lyon Homes Board believed would not be preclusive of a potential third-party bidder submitting an alternative proposal;

 

   

the William Lyon Homes Board’s ability under certain circumstances to change its recommendation;

 

   

William Lyon Homes’ ability under certain circumstances to respond and become fully informed with respect to unsolicited acquisition or business combination proposals from third parties and to provide such third parties with confidential information;

 

   

certain restrictions on Taylor Morrison’s ability to solicit third party proposals for alternative transactions involving Taylor Morrison and William Lyon Homes’ right to terminate the merger agreement and receive a termination fee of $40.0 million from Taylor Morrison if the Taylor Morrison Board changes its recommendation;

 

   

William Lyon Homes’ right to reimbursement of transaction expenses up to $15.0 million in cash from Taylor Morrison if the merger agreement is terminated due to the failure to obtain the requisite approval from the Taylor Morrison stockholders;

 

   

William Lyon Homes’ ability to seek specific performance to prevent breaches of the merger agreement by Taylor Morrison and to enforce specifically the terms of the merger agreement; and

 

   

that the merger agreement contains terms that, taken as a whole, the William Lyon Homes Board believed provided a significant degree of certainty that the merger will be completed as quickly as possible;

 

   

the fact that following the merger, two existing directors of William Lyon Homes will serve as members of the combined company’s board of directors;

 

   

the recommendation of William Lyon Homes’ senior management in favor of the transaction;

 

   

the fact that the adoption of the merger agreement will be subject to approval by the holders of a majority of the voting power of the outstanding shares of William Lyon Homes common stock; and

 

   

the fact that appraisal rights under Section 262 of the DGCL are available to holders of William Lyon Homes common stock that comply with the required procedures under the DGCL, which allows such holders to seek appraisal of the fair value of their shares of William Lyon Homes common stock as determined by the Delaware Court of Chancery in lieu of accepting the Merger Consideration.

 

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In the course of its deliberations, the William Lyon Homes Board weighed these advantages and opportunities against a variety of risks and other potentially negative factors, including but not limited to the following (which are not necessarily in order of importance):

 

   

the risk that changes in the regulatory and legislative landscape or new industry developments, including changes in consumer preferences, may adversely affect the business benefits anticipated to result from the merger;

 

   

the potential negative effects on William Lyon Homes related to the announcement and pendency of the merger, particularly if the merger is not completed, including the potential diversion of management and employee attention, potential employee attrition, the potential effects on business and customer and supplier relationships, diversion of resources from other strategic opportunities, the possibility that the trading price of William Lyon Homes Class A common stock could be adversely affected, and the possibility that the market’s perception of William Lyon Homes’ prospects could be adversely affected;

 

   

the fact that William Lyon Homes has incurred and will continue to incur significant transaction costs and expenses in connection with the merger and the other transactions contemplated by the merger agreement, regardless of whether they are consummated, and if the merger and other transactions are not consummated, William Lyon Homes will generally be required to pay its own expenses associated with the merger and the other transactions contemplated by the merger agreement;

 

   

the costs and challenges associated with the completion of the merger and the realization of the anticipated benefits expected to be obtained in connection with the merger, including management’s time, energy and attention and potential opportunity cost;

 

   

the fact that, because approximately 90% of the Merger Consideration will be in the form of Taylor Morrison common stock, William Lyon Homes stockholders may be subject to greater risks related to potential depreciation in the value of Taylor Morrison common stock following the merger than they would have as stockholders in William Lyon Homes;

 

   

the fact that the stock portion of the Merger Consideration is a fixed exchange ratio of shares of Taylor Morrison common stock to William Lyon Homes common stock, so William Lyon Homes stockholders could be adversely affected by a decrease in the trading price of Taylor Morrison common stock during the pendency of the merger and the fact that the merger agreement does not provide William Lyon Homes with a price-based termination right or similar protection;

 

   

the risk that the potential benefits of the merger may not be fully or partially achieved, or may not be achieved within the expected timeframe;

 

   

the potential challenges and difficulties relating to integrating the operations of William Lyon Homes and Taylor Morrison after consummation of the merger, including the cost to achieve synergies, which will require consolidating certain businesses and functions, integrating organizations, procedures, policies and operations, addressing differences in the business cultures of the two companies and retaining key personnel, and may disrupt each company’s ongoing business operations or adversely affect relationships with customers, suppliers, employees and others;

 

   

certain provisions of the merger agreement could have the effect of discouraging third party offers for William Lyon Homes, including the restriction on William Lyon Homes’ ability to solicit third party proposals for alternative transactions involving William Lyon Homes and the applicable termination fee William Lyon Homes would be required to pay Taylor Morrison to terminate the merger agreement in order to accept a superior proposal from a third party;

 

   

the fact that William Lyon Homes may be required to reimburse Taylor Morrison for up to $9.0 million of its transaction expenses if the merger agreement is terminated due to the failure to obtain the requisite approval from the William Lyon Homes stockholders;

 

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the interim restrictions on the conduct of William Lyon Homes’ business prior to the completion of the merger, which restrictions generally require William Lyon Homes to operate its businesses in the ordinary course of business consistent with past practice with certain exceptions, which may delay or prevent William Lyon Homes from undertaking business opportunities that may arise prior to the completion of the merger;

 

   

the fact that certain executive officers of William Lyon Homes have, and the possibility that other executive officers and directors of William Lyon Homes could have, interests in the transactions contemplated by the merger agreement that are different from, or in addition to, those of William Lyon Homes’ stockholders generally;

 

   

the potential for litigation challenging the merger, and the possibility that an adverse judgment for monetary damages could have a material adverse effect on the operations of the combined company after the merger or that an adverse judgment granting permanent injunctive relief could indefinitely enjoin completion of the merger; and

 

   

various other risks associated with the merger and the businesses of William Lyon Homes, Taylor Morrison and the combined company described in the section entitled “Risk Factors” beginning on page 25 of this joint proxy statement/prospectus.

In addition to considering the factors described above, the William Lyon Homes Board was aware of and considered its fiduciary duties in light of all the foregoing factors.

Based on the reasons set forth above and other reasons considered, the William Lyon Homes Board concluded that the potential risks and uncertainties were outweighed by the benefits that the William Lyon Homes Board expected William Lyon Homes and its stockholders would achieve as a result of the merger, and therefore unanimously recommend that the William Lyon Homes stockholders vote “FOR” the Merger Proposal, “FOR” the Compensation Proposal and “FOR” the William Lyon Homes Adjournment Proposal.

The foregoing discussion of the factors considered by the William Lyon Homes Board is not intended to be exhaustive, but rather includes the principal factors considered by the William Lyon Homes Board. In view of the wide variety of factors considered in connection with its evaluation of the merger and the complexity of these matters, the William Lyon Homes Board did not find it useful or practicable and did not attempt to quantify or assign any relative or specific weights to the various factors that it considered in reaching its determination to approve the merger agreement and to make its recommendations to William Lyon Homes stockholders. In addition, individual members of the William Lyon Homes Board may have given differing weights to different factors. The William Lyon Homes Board conducted an overall review of the factors described above, including thorough discussions with William Lyon Homes’ management and outside legal and financial advisors. The William Lyon Homes Board further realized that there can be no assurance about future results, including results considered or expected as disclosed in the foregoing reasons. The factors, potential risks and uncertainties contained in this explanation of the William Lyon Homes Board’s reasons for the merger and other information presented in this section contain information that is forward-looking in nature and, therefore, should be read in light of the factors discussed in the section entitled “Special Note Regarding Forward-Looking Statements” beginning on page 36 of this joint proxy statement/ prospectus.

In considering the recommendations of the William Lyon Homes Board, William Lyon Homes stockholders should be aware and take into account the fact that certain William Lyon Homes directors and executive officers have interests in the merger that may be different from, or in addition to, the interests of William Lyon Homes stockholders generally. The William Lyon Homes Board was aware of and carefully considered these interests, among other matters, in evaluating the terms and structure, and overseeing the negotiation, of the merger, and in reaching its determination to approve the merger agreement and to make its recommendations to William Lyon Homes stockholders. For more information on the interests of certain William Lyon Homes directors and

 

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executive officers, see the section entitled “The MergerInterests of Certain William Lyon Homes Directors and Officers in the Merger” beginning on page 100 of this joint proxy statement/prospectus.

Opinion of Taylor Morrison’s Financial Advisor, Citi

Opinion of Citigroup Global Markets Inc.

Taylor Morrison retained Citi as its financial advisor in connection with a possible transaction involving William Lyon Homes. In connection with Citi’s engagement, Taylor Morrison requested that Citi evaluate the fairness, from a financial point of view, to Taylor Morrison of the exchange ratio set forth in the merger agreement, taking into account the Cash Consideration per share of William Lyon Homes common stock to be paid by Taylor Morrison pursuant to the merger agreement. On November 5, 2019, at a meeting of the Taylor Morrison Board held to evaluate the proposed merger and at which the merger agreement was approved, Citi rendered to the Taylor Morrison Board an oral opinion, confirmed by delivery of a written opinion, dated November 5, 2019, to the effect that, as of that date and based on and subject to various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken by Citi as set forth in its written opinion, the exchange ratio, taking into account the Cash Consideration per share of William Lyon Homes common stock to be paid by Taylor Morrison pursuant to the merger agreement, was fair, from a financial point of view, to Taylor Morrison.

The full text of Citi’s written opinion, dated November 5, 2019, to the Taylor Morrison Board, which sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken by Citi in rendering its opinion, is attached to this joint proxy statement/prospectus as Annex C and is incorporated herein by reference in its entirety. The summary of Citi’s opinion set forth below is qualified in its entirety by reference to the full text of Citi’s opinion. Citi’s opinion was rendered to the Taylor Morrison Board (in its capacity as such) in connection with its evaluation of the proposed merger and was limited to the fairness, from a financial point of view, as of the date of the opinion, to Taylor Morrison of the exchange ratio, taking into account the Cash Consideration per share of William Lyon Homes common stock to be paid by Taylor Morrison pursuant to the merger agreement. Citi’s opinion did not address any other aspects or implications of the proposed merger or the merger agreement. Citi’s opinion is not intended to be and does not constitute a recommendation to any stockholder as to how such stockholder should vote or act on any matters relating to the proposed merger or otherwise.

In arriving at its opinion, Citi:

 

   

reviewed a draft, dated November 5, 2019, of the merger agreement;

 

   

held discussions with certain senior officers, directors and other representatives and advisors of Taylor Morrison and certain senior officers and other representatives and advisors of William Lyon Homes concerning the businesses, operations and prospects of Taylor Morrison and William Lyon Homes;

 

   

examined certain publicly available business and financial information relating to Taylor Morrison and William Lyon Homes, certain financial forecasts and other information and data relating to William Lyon Homes which were provided to or discussed with Citi by the management of William Lyon Homes, as well as certain financial forecasts and other information and data relating to Taylor Morrison and William Lyon Homes which were provided to or discussed with Citi by the management of Taylor Morrison, including information relating to the operational benefits (including the amount, timing and achievability thereof) anticipated by the management of Taylor Morrison to result from the merger;

 

   

reviewed the financial terms of the merger as set forth in the merger agreement in relation to, among other things: current and historical market prices and trading volumes of the Taylor Morrison common stock and William Lyon Homes Class A common stock, the historical and projected earnings and other operating data of Taylor Morrison and William Lyon Homes, and the capitalization and financial condition of Taylor Morrison and William Lyon Homes;

 

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considered, to the extent publicly available, the financial terms of certain other transactions which Citi considered relevant in evaluating the merger;

 

   

analyzed certain financial, stock market and other publicly available information relating to the businesses of other companies whose operations Citi considered relevant in evaluating those of Taylor Morrison and William Lyon Homes;

 

   

evaluated certain potential pro forma financial effects of the merger on Taylor Morrison; and

 

   

conducted such other analyses and examinations and considered such other information and financial, economic and market criteria as Citi deemed appropriate in arriving at its opinion.

In rendering its opinion, Citi assumed and relied, without independent verification, upon the accuracy and completeness of all financial and other information and data publicly available or provided to or otherwise reviewed by or discussed with Citi and upon the assurances of the management of Taylor Morrison that they were not aware of any relevant information that was omitted or that remained undisclosed to Citi. With respect to financial forecasts and other information and data relating to William Lyon Homes which were provided to or discussed with Citi by the management of William Lyon Homes, Citi was advised by the management of William Lyon Homes that they were reasonably prepared on bases reflecting the best then currently available estimates and judgments of the management of William Lyon Homes as to the future financial performance of William Lyon Homes. With respect to financial forecasts and other information and data relating to Taylor Morrison and William Lyon Homes which were provided to or discussed with Citi by the management of Taylor Morrison, including information relating to the operational benefits (including the amount, timing and achievability thereof) anticipated by the management of Taylor Morrison to result from the merger, Citi was advised by the management of Taylor Morrison that they were reasonably prepared on bases reflecting the best then currently available estimates and judgments of the management of Taylor Morrison as to the future financial performance of Taylor Morrison and William Lyon Homes, such operational benefits (including the amount, timing and achievability thereof) and the other matters covered thereby, and assumed, with the consent of the Taylor Morrison Board, that the financial results (including the operational benefits anticipated to result from the merger) reflected in such forecasts and other information and data would be realized in the amounts and at the times projected.

Citi also assumed, with the consent of the Taylor Morrison Board, that the merger would be consummated in accordance with its terms, without waiver, modification or amendment of any material term, condition or agreement and that, in the course of obtaining the necessary regulatory or third party approvals, consents and releases for the merger, no delay, limitation, restriction or condition would be imposed that would have an adverse effect on Taylor Morrison, William Lyon Homes or the contemplated benefits of the merger that would be material to Citi’s analysis or opinion. Representatives of Taylor Morrison advised Citi, and Citi assumed, that the final terms of the merger agreement would not vary in any material respect from those set forth in the draft Citi reviewed. Citi also assumed, with the consent of the Taylor Morrison Board, that, for federal income tax purposes, the merger would be treated as a tax-free reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended. Citi’s opinion related to the relative values of Taylor Morrison and William Lyon Homes (taking into account the Cash Consideration to be paid by Taylor Morrison pursuant to the merger agreement). Citi did not express any opinion as to what the value of the Taylor Morrison common stock actually would be when issued pursuant to the merger or the price at which the Taylor Morrison common stock would trade at any time. Citi’s opinion was limited to the fairness, from a financial point of view, of the exchange ratio, taking into account the Cash Consideration per share of William Lyon Homes common stock to be paid by Taylor Morrison pursuant to the merger agreement, and Citi expressed no view regarding, and its opinion did not address, the allocation among the William Lyon Homes Class A common stock and the William Lyon Homes Class B common stock of the Taylor Morrison common stock to be issued, and the aggregate Cash Consideration to be paid, by Taylor Morrison in respect of the William Lyon Homes common stock pursuant to the merger agreement. Citi did not make and it was not provided with an independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of Taylor Morrison or William Lyon Homes nor did it make any

 

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physical inspection of the properties or assets of Taylor Morrison or William Lyon Homes. Citi did not express any view as to, and its opinion does not address, the underlying business decision of Taylor Morrison to effect the merger, the relative merits of the merger as compared to any alternative business strategies that might exist for Taylor Morrison or the effect of any other transaction in which Taylor Morrison might engage. Citi also expressed no view as to, and its opinion does not address, the fairness (financial or otherwise) of the amount or nature or any other aspect of any compensation to any officers, directors or employees of any parties to the merger, or any class of such persons, or the consideration to be issued in respect of the Class B Warrant, relative to the exchange ratio or otherwise. Citi’s opinion was necessarily based upon information available to it, and financial, stock market and other conditions and circumstances existing, as of the date of its opinion. The issuance of Citi’s opinion was authorized by Citi’s fairness opinion committee.

In preparing its opinion, Citi performed a variety of financial and comparative analyses, including those described below. The preparation of a financial opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a financial opinion is not readily susceptible to partial analysis or summary description. Citi arrived at its opinion based on the results of all analyses undertaken by it and factors assessed as a whole, and it did not draw, in isolation, conclusions from or with regard to any one factor or method of analysis for purposes of its opinion.

The estimates used by Citi for purposes of its analyses and the valuation ranges resulting from any particular analysis are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those suggested by such analyses. In addition, analyses relating to the value of businesses or securities do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold or acquired. Accordingly, the estimates used in, and the results derived from, Citi’s analyses are inherently subject to substantial uncertainty.

Citi was not requested to, and it did not, recommend or determine the specific consideration payable in the proposed merger. The type and amount of consideration payable in the proposed merger were determined through negotiations between Taylor Morrison and William Lyon Homes and Taylor Morrison’s decision to enter into the merger agreement was solely that of the Taylor Morrison Board. Citi’s opinion was only one of many factors considered by the Taylor Morrison Board in its evaluation of the proposed merger and should not be viewed as determinative of the views of the Taylor Morrison Board or the management of Taylor Morrison with respect to the proposed merger, the exchange ratio or any other aspect of the transactions contemplated by the merger agreement.

Summary of Financial Analyses of Citi

The following is a summary of the material financial analyses prepared and reviewed by the Taylor Morrison Board in connection with the rendering of Citi’s opinion, dated November 5, 2019, to the Taylor Morrison Board. The summary set forth below does not purport to be a complete description of the financial analyses performed by, and underlying the opinion of, Citi, nor does the order of the financial analyses described represent the relative importance or weight given to those financial analyses by Citi. Certain financial analyses summarized below include information presented in tabular format. In order to fully understand the financial analyses, the tables must be read together with the text of each summary as the tables alone do not constitute a complete description of the financial analyses. Considering the data in the tables below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the financial analyses, could create a misleading or incomplete view of such financial analyses. Future results may be different from those described and such differences may be material. Financial data utilized for Taylor Morrison and William Lyon Homes in the financial analyses described below, to the extent based on financial forecasts and estimates of management, were based on (i) certain financial forecasts and other information and data relating to William Lyon Homes provided to or discussed with Citi by the management of William Lyon Homes, as further summarized in the section entitled

 

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“—Certain Unaudited Projected Financial Information” beginning on page 95 (“William Lyon Homes Management Projections”), (ii) certain financial forecasts and other information and data relating to William Lyon Homes, including information relating to the operational benefits (including the amount, timing and achievability thereof) anticipated by the management of Taylor Morrison to result from the merger, provided to or discussed with Citi by the management of Taylor Morrison and approved for Citi’s use by Taylor Morrison, as further summarized in the section entitled “—Certain Unaudited Projected Financial Information” beginning on page 96 of this joint proxy statement/prospectus (“Taylor Morrison Management Projections for William Lyon”) and (iii) certain financial forecasts and other information and data relating to Taylor Morrison, provided to or discussed with Citi by the management of Taylor Morrison and approved for Citi’s use by Taylor Morrison. In addition, the approximate implied per share equity value reference ranges derived from the financial analyses described below, except for the 52-week trading range, were rounded to the nearest $0.05.

In calculating implied exchange ratio reference ranges as reflected in the financial analyses described below, Citi divided the low-ends (or high-ends, as the case may be) of the approximate implied per share equity value reference ranges derived for William Lyon Homes from such analyses, taking into account the Cash Consideration, by the high-ends (or low-ends, as the case may be) of the approximate implied per share equity value reference ranges derived for Taylor Morrison from such analyses in order to calculate the low-ends (or high-ends) of the implied exchange ratio reference ranges.

Selected Public Companies Analyses.

Citi performed separate selected public companies analyses of William Lyon Homes and Taylor Morrison, in each case, on a standalone basis, in which Citi reviewed certain financial and stock market information relating to William Lyon Homes, Taylor Morrison and the selected publicly traded companies listed below.

William Lyon Homes

Citi reviewed certain publicly available financial and stock market information of William Lyon Homes and the following selected companies (collectively, the “William Lyon Homes selected companies”):

 

   

Beazer Homes USA, Inc.

 

   

Century Communities, Inc.

 

   

Green Brick Partners, Inc.

 

   

M/I Homes, Inc.

Although none of the William Lyon Homes selected companies listed above is directly comparable to William Lyon Homes, the companies included were chosen because they have operations that, for purposes of Citi’s analysis and based on its experience and professional judgment, may be considered similar to certain operations of William Lyon Homes based on business sector participation, operational characteristics and financial metrics. The quantitative information used in this analysis, to the extent that it is based on market data, was based on market data as of November 5, 2019.

 

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For each of the William Lyon Homes selected companies, Citi calculated and reviewed, among other information, price as a multiple of (i) calendar year 2021 estimated earnings per share (“EPS”); and (ii) book value of equity as of September 30, 2019. The results of this review were as follows:

 

William Lyon Homes Selected Companies

   Price / 2021E EPS     Price / Book Value  

Beazer Homes USA, Inc.

     N/A       1.1x  

Century Communities, Inc.

     5.7x       0.9x  

Green Brick Partners, Inc.

     N/A       1.0x  

M/I Homes, Inc.

     7.4x       1.3x  

For Reference

            

William Lyon Homes

     6.6x (1)      0.8x  

 

(1)

Using Taylor Morrison Management Projections for William Lyon Homes, this analysis indicated an implied Price to EPS multiple of 4.8x.

Financial data of the William Lyon Homes selected companies were based on Wall Street research analysts’ estimates and other publicly available information. With respect to the multiples calculated for William Lyon Homes for reference, the financial data of William Lyon Homes was based on Wall Street research analysts’ estimates, other publicly available information (as well as the Taylor Morrison Management Projections for William Lyon Homes).

Based on its professional judgment and experience, and taking into consideration the observed multiples for the William Lyon Homes selected companies, Citi identified illustrative ranges of multiples of (i) price to calendar year 2021 estimated EPS of 5.7x to 7.4x and (ii) price to book value of 0.9x to 1.3x. Citi then multiplied those ranges by (i) William Lyon Homes’ estimated earnings for calendar year 2021 of $126 million, as reflected in the William Lyon Homes Management Projections, (ii) William Lyon Homes’ estimated earnings for calendar year 2021 of $155 million, including estimated synergies, as reflected in the Taylor Morrison Management Projections for William Lyon Homes, and (iii) the book value of William Lyon Homes’ equity (excluding non-controlling interests) as of September 30, 2019, of $896 million. Based on the number of outstanding shares of William Lyon Homes common stock on a fully diluted basis as provided by William Lyon Homes management, this analysis indicated the following implied ranges of per share equity values:

 

Price / 2021E EPS

  

Price / Book Value

William Lyon Homes Management
Projections

  

Taylor Morrison Management
Projections for William Lyon Homes

    

$18.15 - $23.50

   $22.05 - $28.55    $20.75 - $29.00

Taylor Morrison

Citi reviewed certain publicly available financial and stock market information of Taylor Morrison and the following selected companies (the “Taylor Morrison selected companies”).

 

   

KB Home

 

   

M.D.C. Holdings, Inc.

 

   

Meritage Homes Corporation

 

   

TRI Pointe Group, Inc.

Although none of the Taylor Morrison selected companies listed above is directly comparable to Taylor Morrison, the companies included were chosen because they have operations that, for purposes of Citi’s analysis and based on its experience and professional judgment, may be considered similar to certain operations of Taylor

 

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Morrison based on business sector participation, operational characteristics and financial metrics. The quantitative information used in this analysis, to the extent that it is based on market data, was based on market data as of November 5, 2019.

For each of the Taylor Morrison selected companies, Citi calculated and reviewed, among other information, price as a multiple of (i) calendar year 2021 estimated EPS; and (ii) book value of equity as of September 30, 2019. The results of this review were as follows:

 

Taylor Morrison Selected Companies

   Price / 2021E EPS      Price  / Book Value  

KB Home

     8.9x        1.5x  

M.D.C. Holdings, Inc.

     8.4x        1.5x  

Meritage Homes Corporation

     9.3x        1.4x  

TRI Pointe Group, Inc.

     9.6x        1.1x  

For Reference

             

Taylor Morrison

     7.0x        1.0x  

Financial data of the Taylor Morrison selected companies and Taylor Morrison were based on Wall Street research analysts’ estimates and other publicly available information and calendarized when necessary.

Based on its professional judgment and experience, and taking into consideration the observed multiples for Taylor Morrison and for the Taylor Morrison selected companies, Citi identified illustrative ranges of multiples of (i) price to calendar year 2021 estimated EPS of 7.0x to 9.6x and (ii) price to book value of 1.0x to 1.5x. Citi then multiplied those ranges by (i) Taylor Morrison estimated earnings for calendar year 2021, and (ii) the book value of Taylor Morrison equity (excluding non-controlling interests) as of September 30, 2019, of $2,480 million. Based on the number of outstanding shares of Taylor Morrison common stock on a fully diluted basis as provided by Taylor Morrison management, this analysis indicated the following implied ranges of per share equity values:

 

Price / 2021E EPS

  

Price / Book Value

$22.25 - $30.55

   $23.70 - $35.05

Implied Exchange Ratio Analysis

Utilizing the approximate implied per share equity value reference ranges derived for William Lyon Homes based on the selected public companies analyses above performed using both the William Lyon Homes Management Projections and the Taylor Morrison Management Projections for William Lyon Homes, compared in each case to the approximate implied per share equity value reference ranges derived for Taylor Morrison, Citi calculated the following approximate implied exchange ratio reference ranges, as compared to the exchange ratio pursuant to the merger agreement, taking into account the Cash Consideration per share of William Lyon Homes common stock to be paid by Taylor Morrison pursuant to the merger agreement, of 0.800x:

 

Implied Exchange Ratio Reference Ranges Based On:

Price / 2021E EPS Multiples
(Derived Using, with Respect to William Lyon Homes):

  

Price / Book Value

William Lyon Homes Management
Projections
   Taylor Morrison Management
Projections for William Lyon Homes
    

0.513x - 0.944x

   0.640x - 1.171x    0.520x - 1.117x

Selected Precedent Transactions Analysis

Using publicly available information, Citi reviewed financial data relating to the nine selected transactions listed below that Citi considered generally relevant as transactions involving target companies in the homebuilding industry (the “selected transactions”).

 

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Although none of the target companies involved in the selected transactions are directly comparable to William Lyon Homes, these transactions were selected, among other reasons and based on Citi’s experience and professional judgment, because the target companies involved in these transactions share similar business characteristics to William Lyon Homes based on business sector participation, operational characteristics and financial metrics.

For each of the selected transactions, Citi calculated and compared price (calculated as the implied value per share of the applicable target company’s common stock on a diluted basis based on the consideration paid in the applicable transaction) as a multiple of the book value of the target company’s equity, as of the end of last fiscal quarter of the target company prior to the announcement of the applicable transaction. The results of this review were as follows:

 

Announcement Date

 

Acquiror

 

Target

  Price / Book Value  

June 2018

  Taylor Morrison Home Corporation   AV Homes, Inc.     1.2x  

February 2018

  William Lyon Homes   RSI Communities LLC     1.5x  

October 2017

  Lennar Corporation   CalAtlantic Group, Inc.     1.3x  

April 2017

  Century Communities, Inc.   UCP, Inc.     0.9x  

February 2017

  Sekisui House, Ltd.   Woodside Homes     1.2x  

September 2016

  Lennar   WCI Communities, Inc.     1.3x  

December 2015

  PulteGroup, Inc.   JW Homes, LLC     1.7x  

June 2015

  Standard Pacific Corp.   The Ryland Group     2.1x  

June 2014

  William Lyon Homes   PNW Home Builders, L.L.C.     1.7x  

Median

        1.3x  

Based on its professional judgment and experience, and taking into consideration the observed multiples for the selected transactions, Citi identified illustrative ranges of multiples of price to book value of 1.1x to 1.5x. Citi then multiplied those ranges by the book value of William Lyon Homes equity (excluding non-controlling interests) as of September 30, 2019, of $896 million. Based on the number of outstanding shares of William Lyon Homes common stock on a fully diluted basis as provided by William Lyon Homes management, this analysis indicated an implied range of per share equity values of $24.85 to $33.45.

Discounted Cash Flow Analyses

Citi performed separate discounted cash flow analyses of William Lyon Homes and Taylor Morrison. A discounted cash flow analysis is designed to estimate an implied value of a company by calculating the present value of the estimated future unlevered after-tax free cash flows of that company over a projection period and a terminal value for that company at the end of the projection period.

William Lyon Homes

Citi conducted discounted cash flow analyses for William Lyon Homes using both the William Lyon Homes Management Projections and the Taylor Morrison Management Projections for William Lyon Homes. For purposes of its analysis, Citi calculated its own estimates of the unlevered free cash flows that William Lyon Homes was expected to generate on a consolidated basis (i) during the period from January 1, 2020 through December 31, 2023, based on the William Lyon Homes Management Projections and (ii) during the period from January 1, 2020 through December 31, 2024, based on the Taylor Morrison Management Projections for William Lyon Homes, calculated, in each case, by taking net operating profit after tax, adding depreciation and amortization, adjusting for changes in real estate inventory and other net working capital, subtracting capital expenditures and treating stock-based compensation as a cash expense. Citi also calculated a range of terminal values for William Lyon Homes as of December 31, 2023, based on the William Lyon Homes Management Projections and as of December 31, 2024, based on the Taylor Morrison Management Projections for William

 

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Lyon Homes, by applying a range of terminal value to inventory multiples of 0.95x to 1.10x, which Citi selected based on its professional judgment and experience, to William Lyon Homes’ estimated real estate inventory (excluding capitalized interest) (i) as of December 31, 2023 as reflected in the William Lyon Homes Management Projections and (ii) as of December 31, 2024 as reflected in the Taylor Morrison Management Projections for William Lyon Homes. The unlevered free cash flows and the range of terminal values were then discounted to present values, as of December 31, 2019, using mid-period discounting convention and discount rates ranging from 6.6% to 7.3%, to derive an implied firm value reference range for William Lyon Homes of $2,440 million to $2,764 million based on the William Lyon Homes Management Projections and an implied firm value reference range for William Lyon Homes of $2,254 million to $2,562 million based on the Taylor Morrison Management Projections for William Lyon Homes. The discount rate range was chosen by Citi based upon an analysis of the weighted average cost of capital of William Lyon Homes, which Citi performed utilizing the capital asset pricing model with inputs that Citi determined were relevant based on publicly available data and Citi’s professional judgment.

By subtracting from the implied firm value reference ranges for William Lyon Homes, William Lyon Homes’ net debt as of September 30, 2019 of $1,365 million (calculated as debt plus cash) and the value of non-controlling interest as of September 30, 2019 of $136 million, adding unconsolidated investments as of September 30, 2019 of $2 million, and dividing the result by diluted share counts of William Lyon Homes calculated using the treasury stock method, based on equity information as of November 1, 2019 as provided by William Lyon Homes management, Citi derived an implied per share equity value reference range for the William Lyon Homes common stock of $23.50 to $31.30 based on the William Lyon Homes Management Projections and an implied per share equity value reference range for the William Lyon Homes common stock of $19.05 to $26.45 based on the Taylor Morrison Management Projections for William Lyon Homes.

Taylor Morrison

Citi conducted a discounted cash flow analysis for Taylor Morrison using certain internal Taylor Morrison management projections for Taylor Morrison. For purposes of its analysis, Citi used estimates of the unlevered free cash flows that Taylor Morrison was expected to generate during the period from January 1, 2020 through December 31, 2024, that were calculated by taking net operating profit after tax, adding depreciation and amortization, adjusting for changes in real estate inventory and other net working capital and subtracting capital expenditures. Citi also calculated a range of terminal values for Taylor Morrison as of December 31, 2024 by applying a range of terminal value to inventory multiples of 0.95x to 1.10x, which Citi selected based on its professional judgment and experience, to Taylor Morrison’ estimated real estate inventory (excluding capitalized interest) as of December 31, 2024 The unlevered free cash flows and the range of terminal values were then discounted to present values, as of December 31, 2019, using mid-period discounting convention and discount rates ranging from 5.9% to 6.6%, to derive an implied firm value reference range for Taylor Morrison of $4,762 million to $5,298 million. The discount rate range was chosen by Citi based upon an analysis of the weighted average cost of capital of Taylor Morrison, which Citi performed utilizing the capital asset pricing model with inputs that Citi determined were relevant based on publicly available data and Citi’s professional judgment.

By subtracting from the implied firm value reference ranges for Taylor Morrison, Taylor Morrison’ net debt as of September 30, 2019 of $1,891 million (calculated as debt plus cash) and the value of non-controlling interest as of September 30, 2019 of $6 million, adding unconsolidated investments as of September 30, 2019 of $128 million, and dividing the result by diluted share counts of Taylor Morrison calculated using the treasury stock method, based on equity information as of November 1, 2019 as provided by Taylor Morrison management, Citi derived an implied per share equity value reference range for the Taylor Morrison common stock of $27.55 to $32.40.

 

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Implied Exchange Ratio Analysis

Utilizing the approximate implied per share equity value reference ranges derived for William Lyon Homes based on the discounted cash flow analyses described above performed using both the William Lyon Homes Management Projections and the Taylor Morrison Management Projections for William Lyon Homes, compared in each case to the approximate implied per share equity value reference ranges derived for Taylor Morrison based on the discounted cash flow analyses described above, Citi calculated the following implied exchange ratio reference ranges, as compared to the implied exchange ratio pursuant to the merger agreement, taking into account the Cash Consideration per share of William Lyon Homes common stock to be paid by Taylor Morrison pursuant to the merger agreement, of 0.800x:

 

Implied Exchange Ratio Reference Ranges Derived Using, with Respect to William Lyon Homes:

William Lyon Homes
Management Projections

  

Taylor Morrison Management
Projections for William Lyon Homes

0.649x - 1.045x

   0.511x - 0.869x

Certain Additional Informational.

Citi noted that the 52-week trading range, equity research analyst price targets and implied premia analyses below with respect to William Lyon Homes and Taylor Morrison, as applicable, are not valuation methodologies and were presented for reference only.

52–Week Trading Range

Citi reviewed the historical intra-day share prices of the William Lyon Homes Class A common stock and the Taylor Morrison common stock for the 52-week period ended November 5, 2019. Citi noted that the low and high intraday prices of the William Lyon Homes Class A common stock during this period were approximately $9.85 and $21.70 per share, and that the low and high intraday prices of the Taylor Morrison common stock during this period were approximately $15.03 and $28.00 per share. Citi also noted that the historical implied exchange ratios of the William Lyon Homes Class A common stock and the Taylor Morrison common stock during such 52-week period based on observed closing prices of such common stock, indicated an implied exchange ratio reference range of 0.588x to 0.869x, as compared to the implied exchange ratio pursuant to the merger agreement, taking into account the Cash Consideration per share of William Lyon Homes common stock to be paid by Taylor Morrison pursuant to the merger agreement, of 0.800x.

Equity Research Analyst Price Targets

Citi reviewed the most recent publicly available research analysts’ one-year forward price targets for the William Lyon Homes Class A common stock and Taylor Morrison common stock prepared and published by selected research analysts. Citi noted that as of November 5, 2019 such price targets ranged from $22.00 to $23.00 for the William Lyon Homes Class A common stock and $24.00 to $33.00 for the Taylor Morrison common stock. Citi also noted that these ranges of price targets, discounted one year at an estimated 9.8% cost of equity for William Lyon Homes and an estimated 7.9% cost of equity for Taylor Morrison, was $20.05 to $20.95 for the William Lyon Homes common stock and $22.25 to $30.60 for the Taylor Morrison common stock. Citi also noted that the exchange ratios implied by the undiscounted stock price targets of such analysts that had provided stock price targets for both the William Lyon Homes Class A common stock and Taylor Morrison common stock, indicated an implied exchange ratio reference range of 0.591x to 0.854x, as compared to the exchange ratio pursuant to the merger agreement, taking into account the Cash Consideration per share of William Lyon Homes common stock to be paid by Taylor Morrison pursuant to the merger agreement, of 0.800x.

Implied Premia Paid

Citi calculated, using publicly available information, the median one-day unaffected stock price premia paid for selected transactions in the homebuilding industry occurring since 2011 that Citi deemed appropriate in its

 

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professional judgment with a transaction size between $1 billion to $10 billion and a stock consideration of more than 80%. The analysis indicated a relevant range of one-day unaffected stock premia of 20% to 30%. Citi then calculated, based on this range of premia, an illustrative range of prices per share of William Lyon Homes common stock of $22.10 to $23.90.

Miscellaneous.

Taylor Morrison has agreed to pay Citi for its services in connection with the merger an aggregate fee of $12,000,000, of which $1,500,000 was payable upon delivery of Citi’s opinion to the Taylor Morrison Board and the remainder is payable contingent upon consummation of the merger. In addition, Taylor Morrison agreed to reimburse Citi for Citi’s reasonable expenses, including fees and expenses of counsel, and to indemnify Citi and related parties against certain liabilities, including liabilities under federal securities laws, arising out of Citi’s engagement.

As the Taylor Morrison Board was aware, certain affiliates of Citi engaged in the commercial lending business have committed to lend under, and will act as lead arranger and bookrunner for, certain credit facilities to be used by a subsidiary of Taylor Morrison in connection with the merger, for which services such affiliates will receive compensation. As the Taylor Morrison Board was also aware, Citi and its affiliates in the past have provided, currently are providing and in the future may provide investment banking services to Taylor Morrison unrelated to the merger, for which services Citi and its affiliates received and expect to receive compensation, including, without limitation, during the two year period prior to the date of Citi’s opinion, having acted as financial advisor in connection with certain M&A related activity, as joint bookrunner in connection with certain offerings of equity securities of Taylor Morrison, as joint bookrunner in connection with certain note issuances of Taylor Morrison and as joint lead arranger and joint bookrunner in connection with certain bridge loan and other credit facilities of Taylor Morrison. For the services described in the two sentences above for Taylor Morrison, Citi and its affiliates received, during the two year period prior to the date of Citi’s opinion, aggregate fees of approximately $16.3 million from Taylor Morrison and/or certain of its affiliates. In addition, as the Taylor Morrison Board was also aware, Citi and its affiliates in the past have provided, and in the future may provide, investment banking services to William Lyon Homes, unrelated to the merger, for which services Citi and its affiliates received and expect to receive compensation, including, without limitation, during the two year period prior to the date of Citi’s opinion, having acted or acting as financial advisor in connection with certain M&A related activity, as joint bookrunner in connection with certain bond offerings of William Lyon Homes and as a lender, syndication agent, joint lead arranger and joint bookrunner in connection with certain credit facilities of William Lyon Homes. For the services described above for William Lyon Homes, Citi and its affiliates received, during the two year period prior to the date of Citi’s opinion, aggregate fees of approximately $3.0 million from William Lyon Homes and/or certain of its affiliates. In the ordinary course of business, Citi and its affiliates may actively trade or hold the securities of Taylor Morrison, William Lyon Homes and their respective affiliates for their own account or for the account of its customers and, accordingly, may at any time hold a long or short position in such securities. In addition, Citi and its affiliates (including Citigroup Inc. and its affiliates) may maintain relationships with Taylor Morrison, William Lyon Homes and their respective affiliates.

Taylor Morrison selected Citi to act as financial advisor in connection with the merger based on Citi’s reputation, experience and familiarity with Taylor Morrison and its businesses. Citi is an internationally recognized investment banking firm that regularly engages in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive bids, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes.

Opinion of William Lyon Homes’ Financial Advisor, J.P. Morgan

Pursuant to an engagement letter dated November 4, 2019, William Lyon Homes retained J.P. Morgan as its financial advisor in connection with the proposed merger.

 

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At the meeting of the William Lyon Homes Board on November 5, 2019, J.P. Morgan rendered its oral opinion to the William Lyon Homes Board, later confirmed by the delivery of a written opinion, dated November 5, 2019, that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the consideration to be paid to the holders of shares of William Lyon Homes common stock in the proposed merger was fair, from a financial point of view, to such holders. The full text of the written opinion of J.P. Morgan, which sets forth the assumptions made, procedures followed, matters considered and limits on the review undertaken, is attached as Annex D to this joint proxy statement/prospectus and is incorporated herein by reference. The summary of the opinion of J.P. Morgan set forth in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of such opinion. William Lyon Homes stockholders are urged to read the opinion in its entirety.

J.P. Morgan’s written opinion was addressed to the William Lyon Homes Board (in its capacity as such) in connection with and for the purposes of its evaluation of the proposed merger, was directed only to the consideration to be paid in the merger and did not address any other aspect of the merger. J.P. Morgan expressed no opinion as to the fairness of the consideration to the holders of any other class of securities, creditors or other constituencies of William Lyon Homes or as to the underlying decision by William Lyon Homes to engage in the proposed merger. The opinion of J.P. Morgan did not take into account the individual circumstances of any holders of William Lyon Homes common stock with respect to control, governance or other rights which may distinguish such holders from other holders. The issuance of J.P. Morgan’s opinion was approved by a fairness committee of J.P. Morgan. The opinion does not constitute a recommendation to any stockholder of William Lyon Homes as to how such stockholder should vote with respect to the proposed merger or any other matter.

In arriving at its opinion, J.P. Morgan, among other things:

 

   

reviewed a draft of the merger agreement dated November 5, 2019;

 

   

reviewed certain publicly available business and financial information concerning William Lyon Homes and Taylor Morrison and the industries in which they operate;

 

   

compared the proposed financial terms of the merger with the publicly available financial terms of certain transactions involving companies J.P. Morgan deemed relevant and the consideration paid for such companies;

 

   

compared the financial and operating performance of William Lyon Homes and Taylor Morrison with publicly available information concerning certain other companies J.P. Morgan deemed relevant and reviewed the current and historical market prices of the William Lyon Homes Class A common stock and Taylor Morrison common stock and certain publicly traded securities of such other companies;

 

   

reviewed certain internal financial analyses and forecasts prepared by or at the direction of the management of William Lyon Homes relating to its business and reviewed certain internal financial analyses and forecasts prepared by or at the direction of the management of Taylor Morrison relating to its business and provided to William Lyon Homes (which were adjusted by William Lyon Homes and provided to J.P. Morgan by William Lyon Homes for use by J.P. Morgan in evaluating Taylor Morrison for purposes of J.P. Morgan’s analyses and opinion), as well as the estimated amount and timing of the cost savings and related expenses and synergies expected to result from the merger; and

 

   

performed such other financial studies and analyses and considered such other information as J.P. Morgan deemed appropriate for the purposes of its opinion.

In addition, J.P. Morgan held discussions with certain members of the management of William Lyon Homes and Taylor Morrison with respect to certain aspects of the merger, and the past and current business operations of William Lyon Homes and Taylor Morrison, the financial condition and future prospects and operations of William Lyon Homes and Taylor Morrison, the effects of the merger on the financial condition and future prospects of William Lyon Homes and Taylor Morrison, and certain other matters J.P. Morgan believed necessary or appropriate to its inquiry.

 

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In giving its opinion, J.P. Morgan relied upon and assumed the accuracy and completeness of all information that was publicly available or was furnished to or discussed with J.P. Morgan by William Lyon Homes and Taylor Morrison or otherwise reviewed by or for J.P. Morgan. J.P. Morgan did not independently verify any such information or its accuracy or completeness and, pursuant to its engagement letter with William Lyon Homes, J.P. Morgan did not assume any obligation to undertake such independent verification. J.P. Morgan did not conduct and was not provided with any valuation or appraisal of any assets or liabilities, nor did J.P. Morgan evaluate the solvency of William Lyon Homes or Taylor Morrison under any state or federal laws relating to bankruptcy, insolvency or similar matters. In relying on financial analyses and forecasts provided to J.P. Morgan or derived therefrom, including the estimated synergies, J.P. Morgan assumed that they were reasonably prepared based on assumptions reflecting the best currently available estimates and judgments by management as to the expected future results of operations and financial condition of William Lyon Homes and Taylor Morrison to which such analyses or forecasts relate. J.P. Morgan expressed no view as to such analyses or forecasts (including the estimated synergies) or the assumptions on which they were based. J.P. Morgan also assumed that the merger and the other transactions contemplated by the merger agreement will qualify as a tax-free reorganization for United States federal income tax purposes and will be consummated as described in the merger agreement, and that the definitive merger agreement will not differ in any material respect from the draft thereof furnished to J.P. Morgan. J.P. Morgan also assumed that the representations and warranties made by William Lyon Homes, Taylor Morrison and Merger Sub in the merger agreement and the related agreements were and will be true and correct in all respects material to its analysis. J.P Morgan is not a legal, regulatory or tax expert and relied on the assessments made by advisors to William Lyon Homes with respect to such issues. J.P. Morgan further assumed that all material governmental, regulatory or other consents and approvals necessary for the consummation of the merger will be obtained without any adverse effect on William Lyon Homes or Taylor Morrison or on the contemplated benefits of the merger.

J.P. Morgan’s opinion was necessarily based on economic, market and other conditions as in effect on, and the information made available to J.P. Morgan as of, the date of such opinion. J.P. Morgan’s opinion noted that subsequent developments may affect J.P. Morgan’s opinion and that J.P. Morgan does not have any obligation to update, revise, or reaffirm such opinion. J.P. Morgan’s opinion was limited to the fairness, from a financial point of view, of the consideration to be paid to the holders of William Lyon Homes common stock in the proposed merger, and J.P. Morgan expressed no opinion as to the fairness of any consideration paid in connection with the proposed merger to the holders of any other class of securities, creditors or other constituencies of William Lyon Homes or the underlying decision by William Lyon Homes to engage in the merger. J.P. Morgan’s opinion did not take into account the individual circumstances of any holders of William Lyon Homes common stock with respect to control, governance or other rights which may distinguish such holders from other holders. Furthermore, J.P. Morgan expressed no opinion with respect to the amount or nature of any compensation to any officers, directors or employees of any party to the proposed merger, or any class of such persons relative to the consideration to be paid to the holders of William Lyon Homes common stock in the proposed merger or with respect to the fairness of any such compensation. J.P. Morgan expressed no opinion as to the price at which William Lyon Homes Class A common stock or Taylor Morrison common stock will trade at any future time. J.P. Morgan was not authorized to and did not solicit any expressions of interest from any other parties with respect to the sale of all or any part of William Lyon Homes or any other alternative transaction.

The terms of the merger agreement, including the consideration, were determined through arm’s length negotiations between William Lyon Homes and Taylor Morrison, and the decision to enter into the merger agreement was solely that of the William Lyon Homes Board and the Taylor Morrison Board. J.P. Morgan’s opinion and financial analyses were only one of the many factors considered by the William Lyon Homes Board in its evaluation of the proposed merger and should not be viewed as determinative of the views of the William Lyon Homes Board or management with respect to the proposed merger or the consideration.

In accordance with customary investment banking practice, J.P. Morgan employed generally accepted valuation methodology in rendering its opinion to the William Lyon Homes Board on November 5, 2019, and contained in the presentation delivered to the William Lyon Homes Board on such date in connection with the

 

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rendering of such opinion. The following summary does not purport to be a complete description of the analyses or data presented by J.P. Morgan. Some of the summaries of the financial analyses include information presented in tabular format. The tables are not intended to stand alone, and in order to more fully understand the financial analyses used by J.P. Morgan, the tables must be read together with the full text of each summary. Considering the data set forth below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of J.P. Morgan’s analyses.

Financial Analysis of William Lyon Homes

Public Trading Multiples. J.P. Morgan compared selected publicly available financial data of William Lyon Homes with similar publicly available data for selected publicly traded companies engaged in businesses which J.P. Morgan judged to be analogous to William Lyon Homes. The companies selected by J.P. Morgan, in addition to Taylor Morrison, were: KB Homes, Meritage Homes, Tri Pointe, MDC Holdings, LGI Homes, Century Communities, M/I Homes, Beazer Homes and Green Brick Partners (the “comparable companies”). The comparable companies were selected, among other reasons, because they were publicly traded companies engaged in the homebuilding business with operations that, for purposes of J.P. Morgan’s analysis, may be considered similar to those of William Lyon Homes. For William Lyon Homes, Taylor Morrison and each comparable company, J.P. Morgan calculated and compared the multiple of equity market price per share as of November 4, 2019 to research analysts’ consensus estimates (i) for such company’s earnings for fiscal year 2019 (“P / 2019E EPS”) and fiscal year 2020 (“P / 2020E EPS”) and (ii) for such company’s estimated tangible book value (“P/TBV”).

Results of the analysis are as follows:

 

     P / 2019E EPS    P / 2020E EPS    P/TBV

Taylor Morrison

   8.5x    7.8x    1.12x

William Lyon Homes

   12.2x    8.2x    1.02x

KB Homes

   12.0x    10.0x    1.55x

Meritage Homes

   12.3x    10.5x    1.50x

Tri Pointe

   12.0x    10.4x    1.16x

MDC Holdings

   10.6x    9.2x    1.39x

LGI Homes

   11.3x    9.6x    N/M

Century Communities

   8.2x    6.8x    1.04x

M/I Homes

   9.0x    8.4x    1.36x

Beazer Homes

   10.4x    8.2x    0.92x

Green Brick Partners

   9.2x    8.4x    1.03x

Based on the results of this analysis, J.P. Morgan derived a multiple reference range for P / 2019E EPS of 8.00x – 12.25x, a multiple reference range for P / 2020E EPS of 6.75x – 10.50x and a multiple reference range of 0.90x – 1.55x for P/TBV for William Lyon Homes.

These multiples were then applied to William Lyon Homes 2019E earnings per share, 2020E earnings per share and estimated tangible book value as of September 30, 2019, in each case based on William Lyon Homes management forecasts provided to J.P. Morgan, yielding implied equity values for the shares of William Lyon Homes common stock of approximately $11.25 to $17.00 for 2019E earnings per share, $15.25 to $23.75 for 2020E earnings per share and $17.00 to $28.75 per share for tangible book value, as compared to the closing share price of William Lyon Homes Class A common stock of $19.30 on November 4, 2019 and the implied value of the merger consideration of $21.80.

 

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Selected Transaction Analysis. Using publicly available information, J.P. Morgan examined selected transactions with respect to homebuilder transactions. Specifically, J.P. Morgan reviewed the following transactions:

 

Acquirer

  

Target

  

Month/Year Announced

Taylor Morrison

   AV Homes    June 2018

William Lyon Homes

   RSI Communities    February 2018

Lennar

   CalAtlantic    October 2017

Century Communities

   UCP    April 2017

Lennar

   WCI Communities    September 2016

William Lyon Homes

   Polygon Northwest Homes    June 2014

TGP/Oaktree

   Taylor Morrison    March 2011

Using publicly available information, J.P. Morgan calculated, for each selected transaction, the ratio of the equity purchase price to the target company’s tangible book equity. This analysis resulted in the following equity purchase price to tangible book equity multiples: 1.26x for Taylor Morrison/AV Homes; 1.27x for William Lyon Homes/RSI Communities; 1.69x for Lennar/CalAtlantic; 0.95x for Century Communities/UCP; 1.33x for Lennar/WCI Communities; 1.69x for William Lyon Homes/Polygon Northwest Homes and 0.87x for TPG/Oaktree/Taylor Morrison. Based on the foregoing analysis J.P. Morgan derived a multiple reference range of 0.90x to 1.70x.

J.P. Morgan applied this range of multiples derived from such analysis to the William Lyon Homes P/TBV as of September 30, 2019 and arrived at an estimated range of implied equity values for William Lyon Homes common stock of between $17.00 and $31.50 per share, as compared to the closing share price per share of William Lyon Homes Class A common stock of $19.30 on November 4, 2019 and the implied value of the Merger Consideration of $21.80.

Discounted Cash Flow Analysis. J.P. Morgan conducted a discounted cash flow analysis for the purpose of determining an implied standalone equity present value per share for the William Lyon Homes common stock based on forecasts provided to J.P. Morgan by the management of William Lyon Homes, assuming a valuation date and net debt as of December 31, 2019.

A discounted cash flow analysis is a method of evaluating an asset using estimates of the future unlevered free cash flows generated by the asset and taking into consideration the time value of money with respect to those future cash flows by calculating their “present value.” The “unlevered free cash flows” refer to a calculation of the future cash flows of an asset without including in such calculation any debt servicing costs. “Present value” refers to the current value of one or more future cash payments from the asset, which is referred to as that asset’s cash flows, and is obtained by discounting those cash flows back to the present using a discount rate that takes into account macro-economic assumptions and estimates of risk, the opportunity cost of capital, capitalized returns and other appropriate factors. “Terminal value” refers to the capitalized value of all cash flows from an asset for periods beyond the final forecast period.

J.P. Morgan calculated the present value of the unlevered free cash flows that William Lyon Homes is expected to generate during fiscal years 2020 through 2024 based upon financial forecasts provided to J.P. Morgan by the management of William Lyon Homes.

J.P. Morgan also calculated a range of terminal values of William Lyon Homes at the end of the 5-year period ending 2024 by applying a terminal value growth rate ranging from 0.25% to 0.75% to the unlevered free cash flow of William Lyon Homes during the final year of the 5-year period. The unlevered free cash flows for 2020-24 and the range of terminal values were then discounted to present values using a range of discount rates from 7.25% to 8.25%, which were chosen by J.P. Morgan based upon an analysis by J.P. Morgan of the weighted average cost of capital of William Lyon Homes. The unlevered present values, which were calculated to exclude

 

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all contribution from William Lyon Homes’ various joint ventures, were adjusted to take into account the present value of forecasted distributions from William Lyon Homes’ various joint ventures using a cost of equity range of 15%-20% as provided by William Lyon Homes management. Based on the management forecasts provided by William Lyon Homes, the discounted cash flow analysis indicated a range of implied equity values per share of William Lyon Homes common stock of between $20.75 and $30.75, as compared to the closing share price per share of William Lyon Homes Class A common stock of $19.30 on November 4, 2019 and the implied value of the Merger Consideration of $21.80.

Financial Analysis of Taylor Morrison

Public Trading Multiples. J.P. Morgan compared selected publicly available financial data of Taylor Morrison with similar publicly available data for selected publicly traded companies engaged in businesses which J.P. Morgan judged to be analogous to Taylor Morrison. The companies selected by J.P. Morgan were: William Lyon Homes and the comparable companies. The comparable companies were selected, among other reasons, because they were publicly traded companies engaged in the homebuilding business with operations that, for purposes of J.P. Morgan’s analysis, may be considered similar to those of Taylor Morrison. For each comparable company, J.P. Morgan calculated and compared (i) P / 2019 EPS and P / 2020E EPS and (ii) P/TBV.

Based on the results of this analysis, J.P. Morgan derived a multiple reference range for P / 2019E EPS of 8.00x – 12.25x, a multiple reference range for P / 2020E EPS of 6.75x – 10.50x and a multiple reference range of 0.90x – 1.55x for P/TBV for Taylor Morrison.

These multiples were then applied to Taylor Morrison 2019E earnings per share, 2020E earnings per share and estimated tangible book value as of September 30, 2019, in each case based on forecasts of the management of Taylor Morrison as adjusted by management of William Lyon Homes and provided to J.P. Morgan by management of William Lyon Homes, yielding implied equity values for the Taylor Morrison common stock of approximately $19.75 to $30.25 for 2019E earnings per share, $18.50 to $28.75 for 2020E earnings per share and $19.50 to $33.25 per share for tangible book value, as compared to the closing share price of Taylor Morrison common stock of $24.13 on November 4, 2019.

Discounted Cash Flow Analysis. J.P. Morgan conducted a discounted cash flow analysis for the purpose of determining an implied standalone equity present value per share for the Taylor Morrison common stock based on forecasts of the management of Taylor Morrison, as adjusted by management of William Lyon Homes and provided to J.P. Morgan by management of William Lyon Homes, assuming a valuation date and net debt as of December 31, 2019.

J.P. Morgan calculated the present value of the unlevered free cash flows that Taylor Morrison is expected to generate during fiscal years 2020 through 2024 based upon financial forecasts of management of Taylor Morrison, as adjusted by management of William Lyon Homes and provided to J.P. Morgan by the management of William Lyon Homes.

J.P. Morgan also calculated a range of terminal values of Taylor Morrison at the end of the 5-year period ending 2024 by applying a terminal value growth rate ranging from 0.25% to 0.75% to the unlevered free cash flow of Taylor Morrison during the final year of the 5-year period. The unlevered free cash flows for 2020-24 and the range of terminal values were then discounted to present values using a range of discount rates from 6.75% to 7.75%, which were chosen by J.P. Morgan based upon an analysis of the weighted average cost of capital of Taylor Morrison. The present values were adjusted to take into account net debt and minority interest. Based on the management forecasts provided by management of Taylor Morrison, as adjusted by management of William Lyon Homes and provided to J.P. Morgan by management of William Lyon Homes, the discounted cash flow analysis indicated a range of implied equity values per share of Taylor Morrison common stock of between $25.75 and $35.75, as compared to the closing share price of Taylor Morrison common stock of $24.13 on November 4, 2019.

 

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Other Financial Analyses

Relative Value Analysis

Based on the implied equity values per share for William Lyon Homes and Taylor Morrison calculated above in “—Financial Analysis of William Lyon Homes—Public Trading Multiples,” “—Financial Analysis of William Lyon Homes—Discounted Cash Flow Analysis,” “—Financial Analysis of Taylor Morrison—Public Trading Multiples” and “—Financial Analysis of Taylor Morrison—Discounted Cash Flow Analysis” beginning on pages 90, 91, 92 and 92, respectively, of this joint proxy statement/prospectus, J.P. Morgan calculated a range of implied exchange ratios based on a comparison of a share of William Lyon Homes common stock to a share of Taylor Morrison common stock, after adjusting for $2.50 of Cash Consideration in the merger, as shown in the table below. For each comparison, J.P. Morgan divided the highest equity value per share for William Lyon Homes by the lowest equity value per share for Taylor Morrison to derive the highest exchange ratio implied by each set of reference ranges. J.P. Morgan also divided the lowest equity value per share for William Lyon Homes by the highest equity value per share for Taylor Morrison to derive the lowest exchange ratio implied by each set of reference ranges. The implied cash adjusted exchange ratios resulting from J.P. Morgan’s analysis were:

Range of Implied Cash Adjusted Exchange Ratios

 

     Low      High  
  

 

 

    

 

 

 

Public Trading Multiples

     

P / TBV

     0.4361x        1.3462x  

P / 2019E EPS

     0.2893x        0.7342x  

P / 2020E EPS

     0.4435x        1.1486x  

Discounted Cash Flow Analysis

     

Intrinsic Valuation

     0.5105x        1.0971x  

The implied cash adjusted exchange ratios for William Lyon Homes and Taylor Morrison were compared to the exchange ratio of 0.8000 per share of Taylor Morrison common stock for a share of William Lyon Homes common stock pursuant to the merger agreement and an exchange ratio of 0.6962x per share of Taylor Morrison common stock for a share of William Lyon Homes common stock based on the closing prices of Taylor Morrison common stock and William Lyon Homes Class A common stock on November 4, 2019, after adjusting for $2.50 of Cash Consideration.

Intrinsic Value Creation Analysis

J.P. Morgan conducted an illustrative implied intrinsic value creation analysis based on the William Lyon Homes Management forecasts provided by the management of William Lyon Homes and the Taylor Morrison forecasts as adjusted by the management of William Lyon Homes and provided to J.P. Morgan by William Lyon Homes management, which compared the implied equity value of William Lyon Homes common stock and Taylor Morrison common stock derived from a discounted cash flow valuation on a standalone basis to the pro forma combined company implied equity value, taking into account the William Lyon Homes Estimated Synergies. J.P. Morgan determined the pro forma combined company implied equity value by calculating the sum of (i) the implied equity values of the William Lyon Homes common stock and the Taylor Morrison common stock using the midpoint values determined pursuant to J.P. Morgan’s discounted cash flow analyses described above, and (ii) the estimated present value of approximately $775 million of the synergies included in the Synergies (representing net present value of run-rate synergies of approximately $75 million), net of any related costs to achieve such synergies, which were discounted to present value using a 7.75% discount rate and a 0.50% terminal growth rate, net of estimated transaction expenses, which Synergies, related costs and transaction expenses were furnished to J.P. Morgan by William Lyon Homes management, less (iii) the Cash Consideration paid to holders of shares of William Lyon Homes common stock of approximately $101 million and transaction expenses paid in cash of approximately $100 million. J.P. Morgan determined the implied value to the holders of

 

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William Lyon Homes common stock by multiplying the pro forma equity value of the combined company by the pro forma equity ownership percentage of the combined company attributable to the existing holders of William Lyon Homes common stock pursuant to the merger. This analysis indicated that, on an illustrative basis, the merger created hypothetical incremental implied value of 19.1% to the holders of shares of William Lyon Homes common stock.

Miscellaneous

The foregoing summary of certain material financial analyses does not purport to be a complete description of the analyses or data presented by J.P. Morgan. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. J.P. Morgan believes that the foregoing summary and its analyses must be considered as a whole and that selecting portions of the foregoing summary and these analyses, without considering all of its analyses as a whole, could create an incomplete view of the processes underlying the analyses and its opinion. As a result, the ranges of valuations resulting from any particular analysis or combination of analyses described above were me