Toll Brothers Inc. agreed to buy Shapell Industries Inc.’s homebuilding business for about $1.6 billion, gaining 5,200 lots in the Los Angeles and San Francisco Bay areas as buyer demand for housing rises.

Toll, the largest U.S. luxury-home builder, will pay for Beverly Hills, California-based Shapell with debt and a share offering, the companies said yesterday in a statement. The deal will more than double the number of California lots controlled by Toll to about 9,200, with most in coastal markets where vacant land is hard to come by, Chief Executive Officer Douglas Yearley Jr. said.

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