5 Firms Guide Rental Co.'s $2.4B Take Private Deal

By McCord Pagan
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Law360 (October 19, 2020, 4:41 PM EDT) -- About five months after its planned merger with Amherst Residential fell apart, rental home company Front Yard said Monday it's agreed to be bought by a partnership between Pretium and funds affiliated with Ares Management in a deal valuing it at $2.4 billion that was led by five law firms.

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 it's agreed to be taken private at $13.50 per share, a 35.5% premium over its closing price Oct. 16 and a more than 45% premium to its one-month average share price.

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 excited to have reached an agreement with Pretium and Ares Management for the sale of our company, which we believe represents an outstanding, value-maximizing outcome for Front Yard stockholders," Front Yard CEO George Ellison said in the statement.

"Pretium has built an impressive portfolio of single-family rental homes and has developed an industry-leading platform that includes more than 40,000 homes under management," he added. "I am confident that the combination of our complementary portfolios, with increased size and scale, operating leverage and efficiencies, will deliver significant benefits to our platform and residents."

The deal follows the May cancellation of what was supposed to be 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 said it would pay Front Yard $100 million in a mixture of fees, equity and debt, the companies said at the time.

"This transaction is an important development in the evolution of the single-family rental sector as the asset class continues to perform strongly and attract increasing amounts of institutional investment," Pretium chairman and CEO Don Mullen said in the statement Monday.

"Pretium is proud of the role we have played in driving the growth and maturation of the industry, and we look forward to building on that track record with this acquisition," he added.

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.

The company's board of directors has approved the transaction and will soon schedule a special meeting to vote on it, the statement said, adding that investors holding nearly 15% of the company's stock have already agreed to support the deal.

Representatives for Front Yard and Ares did not immediately respond to requests for further comment. A spokesperson for Pretium declined to comment beyond the statement. 

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 Alyssa Miller.

Update: This story has been updated to include additional counsel information.

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

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