Fort Worth firm in bidding war for Austin development group

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Forestar Group surged 12.3 percent after homebuilder D.R. Horton offered to buy a 75 percent stake in the real estate and natural resources developer for $16.25 a share. Forestar rose $1.75 to $15.95. D.R. Horton shed 55 cents, or 1.6 percent, to $33.24.

Fort Worth-based D.R. Horton Inc. (DHI) on June 5 offered to purchase 75 percent of Austin-based real estate development firm Forestar Group Inc. for about $520 million.

The move pits homebuilder D.R. Horton against Starwood Capital Group, which said it April it had agreed to purchase Forestar. D.R. Horton’s bid, at 16.25 per share value, represents a 14 percent premium over the purchase price to be paid to the Forestar stockholders pursuant to the merger agreement between Forestar and affiliates of Starwood Capital Group, according to a D.R. Horton news release.

If Forestar accepts the bid, the company would remain public and it would be led by new executive chairman Donald Tomnitz, who served as CEO of D.R. Horton for over 15 years, as well as a “strong management team that is expected to include Forestar’s experienced professionals,” according to the D.R. Horton news release.

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“We believe that D.R. Horton is uniquely positioned to make Forestar the country’s leading residential land development company. Together, we can grow Forestar into a much more significant and valuable company for all of its stockholders,” said Donald R. Horton, D.R. Horton’s chairman. “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.”

Moelis & Company is serving as financial advisor to D.R. Horton in connection with this proposal, and Gibson, Dunn & Crutcher LLP is serving as legal counsel. – The Associated Press contributed to this report.

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