Forestar Weighing Surprise Bid from Homebuilder D.R. Horton

Not So Quick: Bid for 75% of the Company Bests Starwood Capital’s Deal by $2/Share

Forestar Group Inc.(NYSE: FOR)confirmed that it had actually gotten an unsolicited, nonbinding proposal from D.R. Horton Inc. to acquire 75% of the outstanding shares of Forestar common stock for $16.25 in money.

The unexpected offer beats the formerly announced offer from Starwood Capital Group to purchase Forestar for $14.25 per share (approximately $605 million).

Forestar, a residential and mixed-use property development business, owns interests in 50 residential and mixed-use jobs consisted of 4,600 acres in 10 states and 14 markets.

In addition, Forestar lists a collection of various other properties that it has actually determined as non-core, consisting of 523,000 acres of owned mineral assets throughout the southern United States, 19,000 acres of timberland, 4 multifamily residential or commercial properties and 20,000 acres of groundwater leases in central Texas.

For the time being at least, Forestar’s board continues to advise that investors vote in favor of adoption of the Starwood merger contract and has not made a recommendation with regard to the D.R. Horton proposition.

But, Forestar announced its board would “without delay and thoroughly review and think about the D.R. Horton proposal” to determine the very best strategy for its stockholders. Either offer would need investor approval.

Under D.R. Horton’s proposed deal, Forestar would remain a public company, permitting Forestar stockholders to take part in the “substantial worth development” it sees through a strategic relationship with a major homebuilder being a purchaser of its homebuilding websites.

Under Horton’s offer, Forestar would be led by new executive chairman Donald Tomnitz, who acted as CEO of D.R. Horton for over 15 years.

“Our company believe that D.R. Horton is distinctively placed to make Forestar the nation’s leading property land development business,” said Donald R. Horton, chairman, in a statement announcing its offer.

“Together, we can grow Forestar into a much more substantial and valuable business for all its shareholders,” he included.

Starwood Capital has yet to react to the D.R. Horton’s quote.

In April, Starwood Capital suddenly sold off its $150 million stake in homebuilder TRI Pointe Homes (NYSE: TPH), releasing a terse declaration saying that decision “was because of its continuous dissatisfaction in the performance of the company over the past several years, uncertainty in the strategic direction of the business, and difference over the very best method to optimize investor value.”

Starwood had taken TRI Pointe public in 2013 and later on combined it with a Weyerhaeuser subsidiary to produce one of the largest homebuilders in the U.S.

JMP Securities LLC is functioning as monetary advisor to Forestar and Skadden, Arps, Slate, Meagher & & Flom LLP is functioning as legal consultant.


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