Brodsky & Smith LLC have announced that Forestar Group Inc. (NYSE:FOR) directors are being investigated over claims that they breached their fiduciary duty as well as over claims that they violated state law with regards to the company being acquired by Starwood Capital Group. The investigation follows the unanimous approval of the acquisition deal by the board of directors of Forestar Group with the transaction now awaiting the consent of the stockholders. If approved, expectations are that the transaction will be approved in 2017’s third quarter.
Company undervaluation
In the acquisition deal, shareholders of Forestar will get approximately $14.25 for every share of the company that they hold. Brodsky & Smith are looking into whether Starwood is underpaying and consequently whether Forestar’s board breached its fiduciary responsibilities towards the shareholders of the company. Forestar’s financial advisor in the transaction is JMP Securities LLC while the legal advisor is Skadden, Arps, Slate, Meagher & Flom LLP.
Currently, there are concerns that the deal may be an undervaluation of Forestar and the shareholders will end up bearing the loss. This is in view of the fact that on April 20, 2015, Forestar shares traded at $16.03 but what Starwood is paying falls below the target price of analysts which is $16.00 a share.
Real estate
The $605 million acquisition of Forestar Group by Starwood was announced a day before the Easter Weekend. Some of the assets that Forestar owns includes acres of timberland measuring approximately 11,100 acres in the state of Georgia. Forestar Group also owns residential lots in such counties as Cobb, Forsyth and Paulding. The group also has properties in 10 other states.
Forestar Group stockholders who would like to learn more concerning the investigation’s legal ramifications should contact Brodsky & Smith and they will be provided with as much information as possible at no obligation. Another legal practitioner who is also conducting investigations with regards to the breach of fiduciary duties by Forestar’s directors is Willie Briscoe, a former attorney of the U.S. Securities and Exchange Commission.
On Monday shares of Forestar Group Inc edged up by 0.35% to close the day at $14.20.
