Forestar rejects shareholder's proposal, plans share repurchase

By Lisa Kerner

Charlotte, N.C., Feb. 11 - The board of directors of Forestar Group Inc. unanimously rejected a proposal from shareholder Holland M. Ware to acquire the company for $15 per share, it was announced on Wednesday.

The unsolicited proposal significantly undervalues Forestar and is not in the best interest of the company's shareholders, Forestar said.

Ware, a 7.4% shareholder, conditioned the offer upon board representation and the waiver of Forestar's rights agreement, it was previously reported.

Forestar will instead pursue its own strategic initiatives to enhance shareholder value.

According to Forestar, it will:

• Generate significant cash flow, primarily from the sale of approximately 175,000 acres of HBU timberland;

• Reduce debt by approximately $150 million; and

• Repurchase up to 7 million shares, or 20%, of the company's outstanding stock using proceeds from the timberland sale.

"Despite difficult market conditions, we have confidence in our ability to execute these sales," Forestar president and chief executive officer Jim DeCosmo said in a news release.

"We believe these strategic initiatives are consistent with our commitment to enhance shareholder value and position Forestar to take advantage of future growth opportunities."

Goldman, Sachs & Co. is the Forestar's financial adviser.

Forestar is based in Austin, Texas, and operates in three business segments: real estate, mineral resources and fiber resources.

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