Forestar Terminates Starwood Merger Deal To Go With D.R. Horton's Stock Purchase Deal

Shares of Forestar Group Inc. fell 3.2% in premarket trade Thursday, after the land developer terminated its merger deal with Starwood Capital Group, so it could go with the D.R. Horton Inc. deal to buy a 75% stake for $17.75 a share. The announcement comes less than a week after Forestar determined D.R. Horton's deal, which allows it to remain a publicly-traded company, was a "superior proposal" to Starwood's deal to pay $16.00 a share to take the company private. "Forestar's shareholders meaningfully benefit by receiving a superior and immediate cash premium for their shares, while also having the opportunity to retain a substantial stake in a company we are committed to growing into a leading residential land development platform with national scale," said Forestar Chairman Donald Horton. The stock was trading 4.8% below the D.R. Horton's per-share bid price ahead of Thursday's open, but was 5.6% above Starwood's bid price. It has soared 31% year to date through Wednesday, while D.R. Horton shares have rallied 25%, the SPDR S&P Homebuilders ETF has climbed 14% and the S&P 500 has gained 9%.