ConDig (09-Jun-17).  US homebuilder D.R. Horton said that it has entered into a confidentiality agreement with Forestar Group Inc after launching an unsolicited bid for the residential developer earlier this week.

The Fort Worth, Texas-based company said that both companies have agreed to exchange information and participate in discussions after it tabled a $520 million, or $16.25 a share, bid for a 75% stake in Forestar.

It comes as Austin, Texas-based Forestar said that D.R. Horton’s offer could lead to a deal that is superior to its current merger agreement with Starwood Capital Group.

Forestar agreed to be purchased by Starwood for $14.25 a share in April.

It has been reported that Forestar will have to pay Starwood $20 million if it backs out of the deal.

Forestar predominately develops lots and sells them to homebuilders and owns interests in 50 residential and mixed-use projects comprising 4,600 acres of real estate.

The bid by D.R. Horton comes as US homebuilders attempt to expand their land holding in the wake of rising land prices and increased costs due to a lack of skilled labor.