ADDISON — Mobile home manufacturer Southern Energy has announced plans to purchase Cavalier Homes. Southern Energy is based in Addison, and both companies have manufacturing locations in the Winston County town. The sale is valued at $48.5 million, with $2.75 cash payment set for each outstanding share of stock.

Cavalier Homes CEO Bobby Tesney said the sale was partially motivated by the tough economic climate.

“Given the current economic conditions and the tough operating environment of the manufactured housing industry, the proposed merger with Southern Energy Homes represents a tremendous opportunity to maximize shareholder value,” Tesney said in a press release. “The agreed share price represents a 23 percent premium over Friday’s closing stock price in an all-cash offer to acquire Cavalier Homes.”

When asked if Southern Energy plans to potentially close any Cavalier manufacturing locations once the deal is done — such as the Addison plant — Southern Energy CFO Jim Stariha said a final decision has yet to be made.

“They are separate brands, and what I can say is that once we acquire them we do intend to keep making Cavalier projects and selling them,” he said. “We will be taking a look at everything.”

Stariha said the purchase should help strengthen Southern Energy in a variety of ways.

“The main reason we made this purchase was to acquire the Cavalier brand,” he said. “They also have a really strong dealership network.”

The Cavalier dealership network is expected to be an asset for Southern Energy, Stariha said.

“We wanted to get their dealership network to strengthen our network between the states we work in,” he said.

By merging, Stariha said some overlapping functions can be eliminated, which should make the company more efficient.

“We feel … we can eliminate some costs associated with being a standalone company, such as board of director fees and things like that,” he said. “That was one of the main reasons for us.”

Cavalier Homes CFO Mike Murphy said he believes the move will be a positive one.

“We’re happy it happened,” he said.

Winston County Industrial Development Authority representative Grady Batchelor said he believes the sale will be a benefit for the area.

“I think it will be a positive thing for Winston County and the region, especially people employed by Cavalier and the Cavalier suppliers in the region,” he said. “This should strengthen Southern Energy.”

The deal is slated for completion in the third quarter of 2009, subject to the approval of Cavalier Homes’ stockholders.

In addition to the Addison operation, Cavalier has another Alabama manufacturing plant in Hamilton, with additional locations in Georgia and North Carolina.



‰ Trent Moore can be reached by e-mail at trentm@cullmantimes.com, or by telephone at 734-2131, ext. 225.