Apr. 13--Considering that fewer new homes are being built these days, a consolidation of the home building industry is probably inevitable. But in addition to the cost savings gained by merging two big firms together, some analysts said Pulte Homes Inc.'s proposed acquisition of Centex Corp. makes good strategic sense.

That's because Centex has a strong presence in the entry-level home market, while Pulte has a large concentration in the active-adult retirement market through its Del Webb communities.

"We believe the entry-level segment of the market will be the best performer in an upturn and have had concerns that Pulte's high reliance on the active adult segment (45 percent of closings) put the company at a competitive disadvantage to some peers," Wachovia Securities analyst Carl Reichardt wrote in a research note.

Lower home prices and mortgage rates make the market attractive for first-time homebuyers, so as the economy rebounds, the entry-level home market would likely lead a housing recovery, said Reichardt. But retirees who may purchase Del Webb homes could be having problems selling their existing homes, so the active adult market would be slower to recover.

Bloomfield Hills, Mich.-based Pulte has two Del Webb communities and eight other communities in the Jacksonville market, according to its Web site. Dallas-based Centex pulled out of the area homebuilding market a year ago.

With the housing market collapse, Centex's stock had dropped 70 percent and Pulte had fallen 30 percent in the past year before Pulte announced its $1.3 billion deal to buy Centex last week, according to Bloomberg News.

The all-stock deal valued Centex at $10.50 a share, based on Tuesday's closing price. Centex rose $1.44 to $9.06 Wednesday after the deal was announced, but Pulte fell $1.13 to $9.64.

Raymond James & Associates analysts Paul Puryear and Buck Horne said in a research note that they are concerned about Pulte acquiring additional land assets from Centex at a time when even attractive land parcels are likely to drop in price.

"Overall, we view the transaction as a significant win for Centex shareholders, who garner an immediate premium for their shares and a position in a combined entity with ample liquidity to survive the downturn," they wrote.

"That said, on the surface it is still unclear to us why Pulte would opt to acquire such a large portfolio at these prices," they said.

TRAILER BRIDGE MOVEMENT: A Bloomberg News story last week noted some unusual trading activity in Trailer Bridge Inc.'s stock on March 16.