Shareholders of Forestar Group Inc., Austin (NYSE: FOR) at a special meeting on Tuesday approved a merger agreement with D.R. Horton, Arlington Tx. (NYSE:DHI).
D.R. Horton has agreed to acquire approximately 75% of the currently outstanding shares of Forestar.
The affirmative vote of holders of a majority of the outstanding shares of Forestar common stock was required to adopt the merger agreement. 31,963,244 shares of Forestar common stock were voted for approval of the proposal to adopt the merger agreement, representing approximately 76.2% of the outstanding shares as of the record date for the special meeting and approximately 98.3% of the shares present in person or by proxy at the special meeting.
The transaction remains subject to other customary closing conditions. The parties currently expect to close the merger on October 5, 2017.
Forestar is a residential and mixed-use real estate development company. As of June 30, 2017, in its core community development business it owned, directly or through ventures, interests in 48 residential and mixed-use projects comprised of 4,400 acres of real estate located in 10 states and 14 markets. In addition, it owns interests in various other assets that have been identified as non-core that it is divesting opportunistically over time.
As previously announced, former D.R. Horton CEO Donald Tomnitz will serve as executive chairman of a new, publicly held company run by Tomnitz and members of the current Forestar management team. Forestar’s headquarters will remain in Austin.
Don Tomnitz, former D.R. Horton ceo, to lead Forestar executive team.
Both companies will identify land development opportunities to expand Forestar’s platform in its current markets and across D.R. Horton’s national footprint. D.R. Horton plans to acquire a large portion of the lots Forestar develops at market prices from newly identified land acquisition opportunities.
In a June 29 press release, the company explained its rationale for pursuing the deal. “D.R. Horton is committed to owning no more than a two- to three-year supply of lots and supplementing its land pipeline through lot purchase agreements with land developers. This transaction is consistent with its stated long-term strategy of developing strong relationships with land developers across the country and growing the optioned portion of its land and lot position to enhance both operational efficiency and returns. The strategic agreement with Forestar provides D.R. Horton a unique platform to accelerate this strategy.”
It continued, “Most land developers lack the scale and access to capital to consistently supply D.R. Horton with a meaningful portion of lots across its national footprint. Strategic alignment with D.R. Horton’s network of markets, experienced team and land seller and business relationships will rapidly accelerate Forestar’s growth.”
