Forestar Group Inc · NYSE:FOR
Forestar — Merger or Acquisition (June 2017)
21 slides from Forestar's merger presentation, Jun 5, 2017
Slide 1: Proposal to Forestar Group Inc.
Proposal to Forestar Group Inc. June 5, 2017 Sandalwood, Bay Area, California Foothills Estates, Las Vegas, Nevada Tamarron, Houston, Texas Waterleigh, Orlando, Florida Daves Creek Reserve Atlanta, Georgia Catherine Crest Seattle, Washington Exhibit 99.4
Slide 2: Forward-looking statements
This presentation may include “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Although D.R. Horton believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. Factors t
Slide 3: Proposed Transaction Overview
Proposed Transaction Overview
Slide 4: Proposed Transaction Overview
Proposed Transaction Overview D.R. Horton (“DHI”) is proposing to purchase 75% of the outstanding shares of Forestar (“FOR”) for $16.25 per share The approximately 10.7 million shares that DHI does not acquire will remain publicly traded FOR would become a large-scale, national land developer throug
Slide 5: Strategic Rationale of Combination
Strategic Rationale of Combination Land development and homebuilding are highly related, but fundamentally different businesses As the nation’s largest homebuilder on pace to close approximately 45,000 homes in fiscal 2017, DHI has an immense appetite for finished lots DHI is committed to owning no
Slide 6: Operational Overview
Operational Overview Operational terms of the relationship between DHI and FOR would be outlined and agreed to in the Master Supply Agreement FOR would be led by an experienced management team incented to maximize value for FOR’s stockholders FOR would be led by Executive Chairman Donald Tomnitz, wh
Slide 7: Strategic Rationale for DHI and Forestar
Strategic Rationale: DHI is a best-in-class homebuilder that will benefit from a strong strategic relationship with a separate land development company Advances DHI’s focus on maximizing return on assets and inventory turns DHI’s deep in-market relationships, operating platform and economies of scal
Slide 8: Stand-alone Forestar challenges vs. future Forestar strengths
STAND-ALONE FORESTAR CHALLENGES FUTURE FORESTAR STRENGTHS Difficulty identifying critical mass of attractive projects to deploy excess cash and drive growth with current platform Lack of geographic diversification and depth in current markets Inability to effectively leverage SG&A with current scale
Slide 9: Strategic relationship would drive growth and value creation for FOR
A strategic relationship with DHI would drive significant growth and value creation for FOR by capitalizing on the market opportunity available due to a lack of multi-market, well-capitalized, large scale land developers Sources: DHI Management, public filings, Forestar definitive proxy filed 6/1/17
Slide 10: Letter to Forestar Board of Directors
Letter to Forestar Board of Directors
Slide 11: Proposed Master Supply Agreement
Proposed Master Supply Agreement Promotes FOR’s acquisition, development and sale of lots to DHI and other builders FOR and DHI teams would collaborate on new lot development opportunities across DHI’s broad national footprint FOR and DHI teams would each source and present potential lot development
Slide 12: Proposed Stockholders Agreement
Proposed Stockholders Agreement Customary terms for this type of investment including: Permits DHI to nominate a number of members of FOR’s board of directors commensurate with DHI’s equity ownership The FOR board of directors would include at least three independent directors Provides DHI customary
Slide 13: D.R. Horton Overview
D.R. Horton Overview DRHORION Americas Builder
Slide 14: D.R. Horton at a glance
Traded on NYSE as DHI #1 builder for 15 consecutive years1 Annual revenues of $13.1 billion2 43,075 in annual homes closed2 Annual pre-tax income of $1.5 billion2 Total assets of $11.9 billion3 Shareholders’ equity of $7.2 billion3 Book value per share of $19.233 D.R. Horton, Inc. Notes: By closings
Slide 15: 5-Year Cumulative Return and Key Events
5-Year Cumulative Return: (May 2012 – May 2017) D.R. Horton Key Events 1975 1980 1985 1990 1995 2000 2005 2010 2015 DHI has successfully managed to outperform the market through multiple cycles, delivering outsized returns to its shareholders 2002: DHI becomes America’s largest builder by closings v
Slide 16: Geographic Footprint
Geographic Footprint Source: Builder Magazine – 2017 Local Leaders issue Note: Market share rankings based on homes closed Green text represents common DHI and FOR markets 78 Markets | 26 States
Slide 17: Management Tenure & Experience
Average employee tenure: Executive Team and Region Presidents – over 20 years Division Presidents and City Managers – over 13 years Management Tenure & Experience
Slide 18: Broad Range of Product Offerings
Homes for entry-level, move-up, active adult and luxury buyers < $200k $500k+ Represents homes closed for the trailing twelve months ended 3/31/17 7% Broad Range of Product Offerings
Slide 19: Family of Brands
The heart of our business Offered across all 78 markets and 26 states we operate in 67% of homes closed and 70% of home sales revenue Average selling price of $311,000 Introduced in July 2016 as carefree affordable living for active adults Currently in 10 markets and 8 states Low-maintenance lifesty
Slide 20: Land and Development Investment
Source: DHI Management Note:$ in billions Land and Development Investment DHI is one of the largest acquirers and developers of land in North America
Slide 21: Additional Information
Additional Information In connection with the possible completion of D.R. Horton’s proposed transaction with Forestar, it is expected that the parties would cause the filing with the SEC of a registration statement on Form S-4 that would include a proxy statement/prospectus to be distributed to Fore