June 23 (Reuters) - Forestar Group Inc said on Friday top U.S. homebuilder D.R. Horton Inc had sweetened its offer to buy a 75 percent stake in the real estate developer, escalating a bidding war with investment firm Starwood Capital Group.
Forestar said D.R. Horton's new cash offer of $17.75 per Forestar share — up from $16.25 per share previously — was superior to a proposal from Starwood to buy all of Forestar.
D.R. Horton's new offer values 75 percent of Forestar at about $565 million, according to Reuters calculations.
Texas-based Forestar agreed in April to be acquired by Starwood for $14.25 per share. Starwood increased that offer to $15.50 per Forestar share earlier this week and to $16.00 per share on Friday.
The bids for Forestar come at a time when U.S. homebuilders including D.R. Horton are seeking ways to boost their land holding as rising land acquisition costs and a tight labor market hamper efforts to tap the recovery in the housing market.
Forestar, which mainly develops lots and sells them to homebuilders, owns interests in 50 residential and mixed-use projects comprising 4,600 acres of real estate.
Forestar said on Friday its board had informed Starwood that it intends to terminate their merger agreement and sign a deal with D.R. Horton under the homebuilder's sweetened offer.
Forestar's shares were up 4.8 percent at $17.30 in premarket trading. (Reporting by Ankit Ajmera in Bengaluru; Editing by Sai Sachin Ravikumar)