Toll Brothers Inc announced that it would be purchasing the home building unit of Shapell Industries Inc. The cash deal, valued at USD 1.60 billion, would allow Toll Brothers to access vital California real estate markets.

The portfolio of privately-owned Shapell that would be bought by the luxury home builder is comprised of around 5,200 home sites. The company said about 97.5% of these sites are entitled. The portfolio is located in metro Los Angeles, San Francisco Bay, Carlsbad market and Orange County, all of which are high-growth markets and affluent areas in California.

Toll Brothers Chief Executive Douglas Yearley said about transaction, "This acquisition will provide significant growth over the coming years and, we believe, will be accretive to earnings in the first year, excluding transaction costs."

According to a Reuters report, a revival of mergers and acquisitions activity occurred in this year among homebuilders in the US. The companies are trying to meet rising demand for new homes but are met with land shortages on which to construct the homes on.