5 Firms Guide Rental Co.'s Increased $2.5B Offer

By McCord Pagan
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Law360 (November 23, 2020, 1:00 PM EST) -- Following an unsolicited, competing offer from an unnamed third party, rental home company Front Yard said Monday it's agreed to a $100 million increase from its terms last month for its take-private deal with Pretium and funds affiliated with Ares Management in a transaction guided by five law firms valuing it at $2.5 billion.

U.S. Virgin Islands-based Front Yard Residential Corp. said in a joint statement with real estate-focused investment firm Pretium and Ares Management Corp. that under the new terms it will be bought out at $16.25 per share, a 63% premium to its closing price before the then-$2.4 billion transaction was announced Oct. 19.

Under the original terms, Front Yard was to be bought out at $13.50 per share, a 35.5% premium over its closing price Oct. 16.

Front Yard is represented by Weil Gotshal & Manges LLP, Ares is represented by Latham & Watkins LLP and Pretium is guided by Sidley Austin LLP, Fried Frank Harris Shriver & Jacobson LLP and Hunton Andrews Kurth LLP.

"We are confident in the strategic and financial rationale of this transaction, and continue to believe it is the best way to maximize immediate cash value for our stockholders," Front Yard CEO George Ellison said in a statement.

The deal also follows the May cancellation of a $2.3 billion merger between Front Yard and Amherst Residential due to difficulties related to the ongoing coronavirus pandemic. As part of the breakup agreement, Amherst would pay Front Yard $100 million in a mixture of fees, equity and debt, the companies said at the time.

In a filing with the U.S. Securities and Exchange Commission, Front Yard said the new terms also increase the size of its breakup fee from $24 million to about $40.2 million.

"We believe in this company and the Front Yard team and remain committed to completing this transaction," Pretium Chairman and CEO Don Mullen said in the statement.

The deal is expected to close in the first quarter of 2021 and is subject to closing conditions as well as approval by a majority of Front Yard shareholders.

Representatives for Front Yard and Ares did not immediately respond to a request for comment. A spokesperson for Pretium declined to comment.

Pretium is represented by a Hunton team including Kendal Sibley, Andrew Blanchard, Robert Hahn, Joshua Milgrom and Emily Benedict, a Sidley team including Karen Dewis, Matthew Stoker, Jim Warczak, J. Gerard Cummins, Christian Brause, Elizabeth Shea Fries, W. Alex McGee, Kelly Lazaroff, Kelly Dybala and Rémi Gagnon, as well as a Fried Frank team including Steven Rudgayzer, Lee Parks and Libin Zhang. Its financial adviser is RBC Capital Markets LLC.

Ares is represented by a Latham team including Michelle Kelban, Julian Kleindorfer, Owen Alexander, Sarah Smoler, Mark Semotiuk, Nadia Sager, Shandy Pinkowski, Ann Buckingham and Pardis Zomorodi, and its financial adviser is BofA Securities.

Front Yard is represented by a Weil team including Michael Aiello, Sachin Kohli, Kimberly Thibault, Cody Conwell and Robert Duff, and its financial adviser is Deutsche Bank Securities Inc.

Debevoise & Plimpton LLP represented Deutsche Bank, with a team led by M&A partner Andrew Bab and associate Michelle Guo.

--Additional reporting by Benjamin Horney. Editing by Marygrace Murphy.

For a reprint of this article, please contact reprints@law360.com.

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