Forestar Agrees To Be Acquired By D.R. Horton; Terminates Starwood Merger Deal

(RTTNews) - Forestar Group Inc. (FOR) said that it reached a definitive agreement with D.R. Horton Inc. (DHI) by which D.R. Horton will acquire 75% of the outstanding shares of Forestar common stock for $17.75 per share in cash.

As part of the transaction, Forestar and D.R. Horton will enter into a stockholder's agreement and a master supply agreement that establishes a strategic relationship between Forestar and D.R. Horton for the supply of developed lots.

Forestar also announced today that it has terminated its previously announced merger agreement with Starwood Capital Group. Accordingly, Forestar is also announcing the cancellation of its special meeting of stockholders which was scheduled to be held on July 7, 2017.

Following the Merger, D.R. Horton will own approximately 75% of the outstanding Forestar Successor shares, and existing stockholders will own approximately 25% of the outstanding Forestar Successor shares. Forestar will remain a public company, and its common stock will continue to trade on the NYSE under the symbol "FOR", D.R. Horton said.

D.R. Horton noted that it has the cash and other immediately available capital to fund the approximately $560 million cash consideration. The transaction is expected to be accretive to D.R. Horton's fiscal 2018 earnings.

Under the terms of the agreement, Forestar will operate as a public company led by Donald Tomnitz, former CEO of D.R. Horton, as Executive Chairman, and members of the current Forestar management team. Forestar's headquarters will remain in Austin.

The transaction is expected to close in the fourth calendar quarter of 2017 subject to the approval of Forestar shareholders and other customary closing conditions.

Forestar previously announced that it had entered into a merger agreement with Starwood on April 13, 2017, which was subsequently amended, pursuant to which Starwood would acquire all of the outstanding shares of Forestar common stock for $16.00 per share in cash.

On June 5, 2017, Forestar announced that it had received an unsolicited, nonbinding proposal from D.R. Horton to acquire 75% of the outstanding shares of Forestar common stock for $16.25 in cash. On June 8, 2017, Forestar announced that its board of directors, after consultation with its outside legal and financial advisors, had determined that the D.R. Horton proposal could reasonably be expected to lead to a "Superior Proposal," as defined in the Starwood merger agreement.

On June 23, 2017, Forestar announced that it had received a revised binding proposal from D.R. Horton to acquire 75% of the outstanding shares of Forestar common stock for $17.75 per share in cash and that its board of directors had unanimously determined that the revised D.R. Horton proposal constituted a "Superior Proposal," as defined in the amended Starwood merger agreement. After such determination by the Forestar board of directors, Starwood did not make any proposal to adjust the terms and conditions of the amended Starwood merger agreement.

In accordance with the amended Starwood merger agreement, prior to the termination of the amended Starwood merger agreement, Forestar paid Starwood a $20 million termination fee.