Austin-based Forestar Group said Wednesday it has accepted a nearly $560 million majority acquisition bid from Arlington-based homebuilder D.R. Horton,, which outbid a rival offer from the Starwood Capital Group.
Under terms of the deal, which is expected to close by the end of this year, D.R. Horton will acquire 75 percent of Forestar’s stock at a cash price of $17.75 a share.
The deal provides D.R. Horton with direct access to a large land developer, part of the firm’s strategy to secure better access to lots.
The acquisition “advances D.R. Horton’s stated strategy by increasing our access to high-quality optioned land and lot positions and creates strategic alignment between these companies,” Horton’s Chairman Donald R. Horton said in a written statement.
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Forestar will continue to run its residential and mixed-use real estate development operations from Austin, the company said in a news release. It will be led by former D.R. Horton CEO Donald Tomnitz and members of the current Forestar Group management team.
The deal caps a brief bidding war between D.R. Horton and Starwood, which initially offered $14.25 a share. Starwood, a Connecticut-based investment firm, had bumped its offer to $15.50, and nudged it up again Friday to $16 a share.
D.R. Horton initially proposed $16.25, then upped that to its final $17.75 offer, also on Friday.
If approved by boards, shareholders and regulators, the acquisition will close a final chapter on Temple-Inland Inc., once one of Austin’s few Fortune 500 companies. Forestar Group was the largest piece spun off from Temple-Inland in 2007.
Through the years, Forestar Group has operated in real estate, oil and gas and other natural resources. It currently operates primarily as a residential and mixed-use real estate development company, with interests in 50 residential and mixed-use projects comprising 4,600 acres of real estate.