Forestar Group Inc. (NYSE:FOR) Investor Lawsuit Against Takeover

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Company Name(s): 
Forestar Group
Case Name: 
Forestar Group Deal Case 07/07/2017
Case Status: 
Lawsuit Filed
Affected Securities
Lawsuit Overview
Type of Lawsuit: 
Mergers and Acquisition
Date Filed: 

July 7, 2017 (Shareholders Foundation) - An investor, who currently holds shares of Forestar Group Inc. (NYSE:FOR), filed a lawsuit in effort to halt the proposed takeover of Forestar Group Inc. by affiliates of Starwood Capital Group.

The plaintiff alleges that the defendants breached their fiduciary duties owed to NYSE:FOR stockholders by agreeing to sell Forestar Group Inc. cheaply via an unfair process to affiliates of Starwood Capital Group.

On April 13, 2017, Forestar Group Inc. (NYSE:FOR) announced that it has entered into a merger agreement with affiliates of Starwood Capital Group under which Starwood Capital Group will acquire all of the outstanding shares of common stock of the Company for $14.25 per share in cash.

Shareholders are scheduled to vote on the merger at a special meeting on July 7, 2017.

On June 5, 2017, Forestar Group Inc confirmed that on June 5, 2017 its board of directors received an unsolicited, nonbinding proposal from D.R. Horton, Inc. to acquire 75% of the outstanding shares of Forestar Group Inc common stock for $16.25 in cash.

However, plaintiff claims that the proposed consideration NYSE:FOR shareholders will receive with Starwood Capital Group offer is grossly inadequate and undervalues Forestar Group Inc. Indeed, at least one analyst has set the high target price for NYSE:FOR shares at $16.00 per share. Forestar Group Inc. reported that its annual Total Revenue declined from $218.58 million in 2015 to $197.31 million in 2016 and that its Net loss of $26.92 million in 2015 turned into a Net Income of $75.51 million in 2016. Shares of Forestar Group Inc. (NYSE:FOR) reached as high as $24.00 per share in 2013. In addition, the plaintiff alleges that the process is also unfair NYSE:FOR stockholders

On June 23, 2017, NYSE:FOR shares closed at $17.65 per share.