Amherst, Front Yard Nix $2.3B Merger Over Market Uncertainty

By Benjamin Horney
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Law360 (May 4, 2020, 11:14 AM EDT) -- Front Yard Residential and Amherst Residential said Monday that they have scrapped their planned $2.3 billion merger because of difficulties related to the ongoing coronavirus pandemic, and as part of the agreement, Amherst will pay Front Yard $100 million in a mixture of fees, equity and debt. 

The companies inked a settlement agreement to get out of the deal, under which Amherst Residential LLC will pay a $25 million fee, buy $55 million worth of Front Yard Residential Corp. stock, and provide the company with a $20 million, two-year unsecured loan facility, according to a statement. 

Sean Dobson, chairman and CEO for Amherst, said in the press release that the settlement agreement "builds on our long relationship with the Front Yard team." 

"The unprecedented global health crisis has made the integration of the organizations too operationally complex and uncertain at this time, and we believe this equity investment is the best path forward for both companies' investors, employees and stakeholders," Dobson said. 

Dobson added that Amherst remains "confident that Front Yard is well positioned to capitalize on positive industry fundamentals, deliver a return on our investment and achieve long-term growth."

The deal between the two single-family rental home firms, announced in February and guided by Gibson Dunn and Weil Gotshal, would have seen Amherst pay $12.50 per share for Front Yard. Amherst said the deal was set to roughly double its portfolio of rental homes across the country. Amherst Residential is a subsidiary of real estate investment firm Amherst Holdings, and with the acquisition, Amherst Residential was set to grow its nationwide portfolio to more than 36,000 homes.

"While we are disappointed that the transaction with Amherst will not close, we believe that we have reached an outcome that will allow the Company to focus on delivering long-term shareholder value while putting it in a strong financial position going forward," said George Ellison, CEO for Front Yard. 

Goldman Sachs & Co. LLC and Credit Suisse Securities (USA) LLC advised Amherst Residential on the matter, while Deutsche Bank Securities Inc. advised Front Yard.

Amherst Residential is represented by Eduardo Gallardo, Jason Durschlag, Andrew Kaplan, Darius Mehraban, Matthew Kidd and Brian Kniesly of Gibson Dunn & Crutcher LLP.

Front Yard Residential is represented by Michael Aiello, Sachin Kohli, Megan Pendleton, Dov Kogen, Kimberly Thibault, Cody Conwell and Robert Duff of Weil Gotshal & Manges LLP.

--Additional reporting by Andrew McIntyre. Editing by Katherine Rautenberg.

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