On October 28, 2024, D.R. Horton, Inc. (DHI, Financial) and Forestar Group Inc. entered into an Amended and Restated Stockholder’s Agreement. This new agreement revises the original Stockholder’s Agreement from June 29, 2017, between the two companies. The primary change involves increasing the investment approval thresholds from $20 million to $45 million. This adjustment reflects a strategic move to allow greater flexibility in capital expenditures and investment decisions.
The updated agreement stipulates that the Investment Committee of Forestar retains sole responsibility for investment decisions involving capital expenditures up to $45 million. For transactions exceeding this amount, prior written consent from D.R. Horton is required. This change is also reflected in Forestar’s Second Amended and Restated Certificate of Incorporation.
Additionally, the agreement introduces an annual adjustment mechanism based on the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index. The approval threshold will increase annually by the percentage change in this index, rounded to the nearest $100,000. If the index change is negative, the threshold will remain unchanged until the next adjustment date.
Forestar plans to propose a Charter Amendment to align with these changes at its 2025 Annual Meeting of Stockholders. Until stockholder approval is obtained, the current Charter provisions remain in effect. As of the agreement date, D.R. Horton holds approximately 62% of Forestar’s outstanding common stock.
This strategic amendment aims to enhance operational flexibility and align investment strategies with market conditions, potentially benefiting both companies' growth trajectories.
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