8-KMaterial AgreementsRegulation FDExhibits & Filings

HORTON D R INC /DE/ 8-K Report, Material Agreement (Jun 29, 2017)

Filed June 29, 2017For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) has announced a significant strategic move by entering into a Merger Agreement with Forestar Group Inc. (FOR) on June 29, 2017. This transaction will see Forestar merged with a subsidiary of DHI, with Forestar surviving. Shareholders of Forestar will have the option to receive $17.75 in cash or one share of the surviving company for each Forestar share, subject to proration. This acquisition aims to integrate Forestar's operations more closely with D.R. Horton's existing business. Key to this transaction are the accompanying Stockholder's Agreement and Master Supply Agreement. The Stockholder's Agreement outlines the post-merger governance of Forestar, with DHI gaining significant influence over its board composition and strategic decisions, especially as its ownership stake grows. The Master Supply Agreement establishes a framework for DHI to acquire lots from Forestar for development, ensuring a continued supply chain and collaboration between the two entities. These agreements indicate a long-term strategic partnership beyond the initial merger, focusing on optimizing land acquisition and development opportunities.

Key Highlights

  • 1D.R. Horton (DHI) enters into a Merger Agreement with Forestar Group Inc. (FOR).
  • 2Forestar shareholders can elect to receive $17.75 cash or one share of the surviving company per Forestar share.
  • 3The merger will result in D.R. Horton owning approximately 75% of the surviving company's stock, with former Forestar shareholders holding approximately 25%.
  • 4A Stockholder's Agreement will grant D.R. Horton significant control over Forestar's board and strategic decisions post-merger.
  • 5A Master Supply Agreement establishes a framework for D.R. Horton to purchase lots from Forestar for development.
  • 6The merger is subject to Forestar shareholder approval and other customary closing conditions, with a termination date of January 25, 2018.
  • 7Forestar may be required to pay a $20 million termination fee to D.R. Horton under specific circumstances, such as entering into a superior proposal.

Frequently Asked Questions

Forestar Group Inc. shareholders will have the option to receive either $17.75 in cash per share or one share of the surviving company's common stock for each Forestar share they own. The elections will be subject to proration procedures if there is oversubscription or undersubscription for the cash consideration.

Immediately following the merger, D.R. Horton is expected to hold approximately 75% of the outstanding shares of the surviving company, with the former stockholders of Forestar collectively holding approximately 25%.

The Master Supply Agreement, effective upon closing the merger, establishes a framework for D.R. Horton to collaborate with and acquire lots from Forestar for development. It outlines D.R. Horton's rights to purchase lots from Forestar-sourced development opportunities and D.R. Horton-sourced development opportunities.

The consummation of the merger is subject to several conditions, including the approval of the Merger Agreement by a majority of Forestar's outstanding common stock shareholders, the absence of any prohibitive laws or orders, a limit on dissenting shares (less than 20%), the effectiveness of Forestar's registration statement on Form S-4, approval for listing of the surviving company's stock on the NYSE, and the absence of a Company Material Adverse Effect.