Corporate News Blog – Forestar Group Receives Competitive Offer from D.R. Horton Within Months of Signing Merger Agreement with Starwood Capital

LONDON, UK / ACCESSWIRE / June 7, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for D.R. Horton, Inc. (NYSE: DHI) and Forestar Group Inc. (NYSE: FOR). Home construction Company D.R. Horton announced on June 05, 2017, that it had sent a proposal to the Board of Directors of Forestar Group to acquire a majority stake in the Company. D.R. Horton plans to acquire 75% of Forestar’s outstanding shares at $16.25 per share in cash. The offer price is 14% higher than the purchase price offered by Starwood Capital as part of the merger agreement signed by Forestar and affiliates of Starwood Capital Group. For immediate access to our complimentary reports, including today’s coverage, register for free now at:

http://protraderdaily.com/register/

At Pro-TD, we make it our mission to bring you news that matter about the stock you follow. Today, our research desk covers a blog story on DHI and FOR. Go directly to your stock of interest and access today’s free coverage at:

http://protraderdaily.com/optin/?symbol=DHI

http://protraderdaily.com/optin/?symbol=FOR

Commenting on the proposal, Donald R. Horton, Chairman of the Board of D.R. Horton said:

“The Forestar proposal is a continuation of D.R. Horton’s stated strategy of expanding relationships with land developers across the country and growing the optioned portion of its land and lot position to enhance operational efficiency and returns. We urge the Forestar Board to act quickly on this proposal which is in the best interests of their stockholders.”

Details of D.R. Horton’s Proposal

As per the proposal the merger will be between a newly created wholly owned subsidiary of D.R. Horton and Forestar. D.R. Horton’s offer comes with a cash option, wherein Forestar’s shareholders can opt to receive $16.25 per share in cash or continue to hold on their shares in Forestar. After the shareholders decide their choice, the choices will be prorated and 75% of Forestar’s shares will be converted into cash @ $16.25 per share. Once the merger is completed D.R. Horton will own 75% stake and the remaining 25% stake will be owned by Forestar’s shareholders. Forestar will continue as a publicly traded entity and its shares would continue to be traded on New York Stock Exchange.

D.R. Horton has indicated that it has the requisite cash and requisite capital to finance the acquisition. The value of the transaction is approximately $520 million.

The proposal is a broad overview and the exact terms and conditions of the merger between D.R. Horton and Forestar would be chalked out in the final Merger Agreement, Master Supply Agreement and Stockholder Agreement.

Attractions for Forestar in D.R. Horton’s proposal

As per the proposal put forth by D.R. Horton, Forestar would continue to remain a public Company. The offer price would give Forestar access to capital to increase its scale of business. The strategic partnership between D.R. Horton and Forestar would create great value for Forestar’s shareholders as D.R. Horton would assist in the development and organic growth of Forestar into the leading residential land development Company in the US.

Forestar which is a residential and mixed-use real estate development Company could easily sell its developed residential lots to D.R. Horton and other homebuilders.

D.R. Horton has identified Donald Tomnitz to helm the affairs at Forestar in his role as Executive Chairman. Donald served as CEO of D.R. Horton for over 15 years and Forestar would greatly benefit from his leadership, experience and expertise. Forestar would also have the support of a strong management team that would include members from its current top management.

Benefits of the deal for D.R. Horton

Founded in 1978, D.R. Horton is in the business of construction and sale of high-quality homes. It is one of the largest home builders by volume in the US for fifteen consecutive years. It is headquartered in Fort Worth, Texas and its operation spans 78 markets in 26 states in the US. For the 12-month period March 31, 2017, the Company closed 43,075 homes.

D.R. Horton is keen for the proposal to go through as it is feeling the pressure of rising costs of land acquisition and a tight labor market. The acquisition will give access to the land and developed plots owned by Forestar, which will help D.R. Horton’s supply pipeline for land and plots to build its projects. This will allow D.R. Horton to focus on maximizing return on assets and inventory turns.

Forestar’s merger agreement with Starwood Capital

Forestar is based in Austin, Texas and is a residential and mixed-use development Company. Forestar owned interest in 50 residential and mixed-use projects comprised of approximately 4,600 acres of real estate located in 10 states and 14 markets as of end of FY16.

On April 13, 2017, Forestar announced that it had signed a merger agreement with affiliates of Starwood Capital Group, wherein Starwood would acquire all the outstanding shares of Forestar. As per the all-cash agreement, Starwood would pay $14.25 per share. The transaction had an equity value of approximately $605 million. Forestar’s Board of Directors had approved the deal and it was expected to be completed in Q3 2017. The deal was awaiting approval from Forestar’s shareholders.

Now that D.R. Horton has jumped in the foray, all eyes are on Starwood and how it responds to this proposal.

Last Close Stock Review

On Tuesday, June 06, 2017, the stock closed the trading session at $33.21, slightly falling 0.24% from its previous closing price of $33.29. A total volume of 3.14 million shares have exchanged hands. D.R. Horton’s stock price surged 1.10% in the last three months, 21.74% in the past six months, and 7.30% in the previous twelve months. Moreover, the stock rallied 21.51% since the start of the year. The stock is trading at a PE ratio of 12.92 and has a dividend yield of 1.20%. At Tuesday’s closing price, the stock’s net capitalization stands at $12.22 billion.

At the closing bell, on Tuesday, June 06, 2017, Forestar Group’s stock dropped 1.25%, ending the trading session at $15.80. A total volume of 2.59 million shares have exchanged hands, which was higher than the 3-month average volume of 830.65 thousand shares. The Company’s stock price surged 11.66% in the last one month, 17.91% in the past six months, and 22.58% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have rallied 18.80%. The stock is trading at a PE ratio of 7.86 and currently has a market cap of $659.02 million.

Pro-Trader Daily:

Pro-Trader Daily (Pro-TD) produces regular sponsored and non-sponsored reports, articles, stock market blogs, and popular investment newsletters covering equities listed on NYSE and NASDAQ and Canadian stocks. PRO-TD has two distinct and independent departments. One department produces non-sponsored analyst certified content generally in the form of press releases, articles and reports covering equities listed on NYSE and NASDAQ and the other produces sponsored content (in most cases not reviewed by a registered analyst), which typically consists of compensated investment newsletters, articles and reports covering listed stocks and micro-caps. Such sponsored content is outside the scope of procedures detailed below.

PRO-TD has not been compensated; directly or indirectly; for producing or publishing this document.

PRESS RELEASE PROCEDURES:

The non-sponsored content contained herein has been prepared by a writer (the “Author”) and is fact checked and reviewed by a third party research service company (the “Reviewer”) represented by a credentialed financial analyst, for further information on analyst credentials, please email contact@protraderdaily.com. Rohit Tuli, a CFA® charterholder (the “Sponsor”), provides necessary guidance in preparing the document templates. The Reviewer has reviewed and revised the content, as necessary, based on publicly available information which is believed to be reliable. Content is researched, written and reviewed on a reasonable-effort basis. The Reviewer has not performed any independent investigations or forensic audits to validate the information herein. The Reviewer has only independently reviewed the information provided by the Author according to the procedures outlined by PRO-TD. PRO-TD is not entitled to veto or interfere in the application of such procedures by the third-party research service company to the articles, documents or reports, as the case may be. Unless otherwise noted, any content outside of this document has no association with the Author or the Reviewer in any way.

NO WARRANTY

PRO-TD, the Author, and the Reviewer are not responsible for any error which may be occasioned at the time of printing of this document or any error, mistake or shortcoming. No liability is accepted whatsoever for any direct, indirect or consequential loss arising from the use of this document. PRO-TD, the Author, and the Reviewer expressly disclaim any fiduciary responsibility or liability for any consequences, financial or otherwise arising from any reliance placed on the information in this document. Additionally, PRO-TD, the Author, and the Reviewer do not (1) guarantee the accuracy, timeliness, completeness or correct sequencing of the information, or (2) warrant any results from use of the information. The included information is subject to change without notice.

NOT AN OFFERING

This document is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only. Please read all associated disclosures and disclaimers in full before investing. Neither PRO-TD nor any party affiliated with us is a registered investment adviser or broker-dealer with any agency or in any jurisdiction whatsoever. To download our report(s), read our disclosures, or for more information, visit http://protraderdaily.com/disclaimer/.

CONTACT

For any questions, inquiries, or comments reach out to us directly. If you’re a company we are covering and wish to no longer feature on our coverage list contact us via email and/or phone between 09:30 EDT to 16:00 EDT from Monday to Friday at:

Email: contact@protraderdaily.com

Phone number: (917) 341.4653

Office Address: Mainzer Landstrasse 50 Frankfurt am Main, Germany 60325

CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.

SOURCE: Pro-Trader Daily

ReleaseID: 465058