Toll Brothers (TOL) said it will buy Shapell Industries, a home building privately owned business, for about $1.60 billion in cash, giving the largest luxury homebuilder more access to affluent real estate markets in California. Per Reuters:

M&A activity picked up in 2013 among U.S. homebuilders, which have been struggling to meet burgeoning demand for new homes due to a shortage of land that is ready to build on.

"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," Douglas Yearley, Toll Brothers chief executive, said in a statement.

Toll Brothers will acquire Shapell's land portfolio, which consists of about 5,200 home sites, most of which are entitled, the company said in a statement late on Wednesday.