Starwood Capital Group on Wednesday sweetened its offer to acquire the outstanding shares of Austin-based land developer Forestar Group from $14.25 per share to $15.50, Forestar said in a press release. The Forestar board amended its existing merger agreement with Starwood to reflect the change.
“Other than the increase in the merger consideration to $15.50 per share in cash, all other terms and conditions in the Starwood merger agreement remain unchanged,” read the release from Forestar, which entered into the agreement with Starwood on April 13.
D.R. Horton (NYSE:DHI) on June 5 offered $16.25 per share for 75% of Forestar’s outstanding stock and subsequently grow the company by taking it public. It responded Thursday morning with a statement urging the Forestar board to deem the Horton offer “superior.”
In the statement, Donald R. Horton, DHI chairman, said, “We are confident that our proposal is superior to the amended agreement with Starwood and remain fully committed to closing a Forestar transaction in the best interests of both companies’ shareholders. We have completed our due diligence and have submitted a fully negotiated Merger Agreement, Master Supply Agreement and Stockholder Agreement to the Forestar Board of Directors. We urge the Forestar Board to formally declare our proposal to be a ‘Superior Proposal,’ and to proceed to a definitive agreement with D.R. Horton and postpone the shareholder meeting scheduled for July 7, 2017.”
Wednesday’s Forestar release indicated that the board is not taking sides. “Today, Forestar’s board of directors has determined that the unsolicited, nonbinding proposal from D.R. Horton continues to be a proposal that could reasonably be expected to lead to a “Superior Proposal,” as defined in Forestar’s amended merger agreement with Starwood. Forestar’s board of directors, which is committed to maximizing value for shareholders, will continue to take certain actions in accordance with the procedures set forth in the amended merger agreement with Starwood to further consider D.R. Horton’s proposal, including participating in discussions or negotiations regarding D.R. Horton’s proposal, in order to determine whether it constitutes a “Superior Proposal” to the amended merger agreement with Starwood.”
It continued, “Forestar remains subject to the amended merger agreement with Starwood. Forestar’s board of directors is not modifying, withdrawing, amending or qualifying its recommendation in favor of the Starwood merger agreement and the merger contemplated thereby, or proposing to do so, and is not making any recommendation with respect to the D.R. Horton proposal. There is no assurance that the transactions with either Starwood or D.R. Horton will be completed.”
