Updated: Forestar Provides a Nod to Surprise Bid from Homebuilder D.R. Horton

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

Forestar Group Inc.(NYSE: FOR)this morning announced that its board has actually determined that the unsolicited, nonbinding proposition gotten from D.R. Horton Inc. (NYSE: DHI)to acquire 75 % of the impressive shares of Forestar typical stock for $16.25 in money might reasonably be anticipated to cause a “exceptional proposition,” to Forestar’s merger arrangement with Starwood Capital Group.

The decision enables Forestar to enter into negotiations with D.R. Horton for a binding offer.

[Editor’s Note: This story was updated Thursday June 8 at 9 AM]

The unforeseen deal beat the formerly revealed deal from Starwood Capital Group to purchase Forestar for $14.25 per share (roughly $605 million).

Forestar remains subject to that merger contract with Starwood. And Forestar’s board of directors is not customizing, withdrawing, amending or qualifying its suggestion in favor of the Starwood merger. The company added that there can be no assurance that it will reach a remarkable handle D.R. Horton.

Forestar, a domestic and mixed-use realty advancement company, owns interests in 50 residential and mixed-use jobs consisted of 4,600 acres in 10 states and 14 markets.

In addition, Forestar notes a collection of numerous other properties that it has actually recognized as non-core, including 523,000 acres of owned mineral possessions throughout the southern US, 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 agreement and has actually not made a recommendation with regard to the D.R. Horton proposal.

But, Forestar revealed its board would “quickly and carefully review and think about the D.R. Horton proposition” to identify the very best course of action for its stockholders. Either deal would require investor approval.

Under D.R. Horton’s proposed transaction, Forestar would stay a public company, permitting Forestar investors to participate in the “substantial value production” it sees through a tactical relationship with a significant homebuilder being a buyer of its homebuilding websites.

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

“We believe that D.R. Horton is uniquely positioned to make Forestar the country’s leading domestic land development business,” stated Donald R. Horton, chairman, in a statement announcing its deal.

“Together, we can grow Forestar into a lot more significant and important business for all of its investors,” he included.

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

In April, Starwood Capital all of a sudden sold off its $150 million stake in homebuilder TRI Pointe House (NYSE: TPH), releasing a terse statement saying that decision “was because of its ongoing frustration in the performance of the business over the previous a number of years, uncertainty in the tactical instructions of the business, and argument over the very best way to optimize shareholder value.”

Starwood had actually taken TRI Pointe public in 2013 and later combined it with a Weyerhaeuser subsidiary to produce one of the largest homebuilders in the United States

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


Leave a Reply

Your email address will not be published. Required fields are marked *