Centex Corp. had been shopping its commercial construction unit to prospective buyers for some time but started moving toward a decision in the last several months. The company wanted to concentrate on homebuilding, where even though sales have slowed recently the profit margins are 10% to 15%.
“We’ve been hearing about them having discussions,” says Hugh Rice, chairman of consultant FMI. Compared to homebuilding, the profit of Centex’s commercial and government construction unit “tends to be lower. It’s a huge volume, just lower traditionally, so it has a depressing effect” on Centex’s share price, says Rice.