01.11.2006 11:40 - category: Real Estate: Real Estate Industry
NEW YORK (Reuters) -- Commercial real estate company CB Richard Ellis Group, Inc. said Tuesday it agreed to buy real estate services rival Trammell Crow Company in a cash deal valued at $2.2 billion to boost its ability to manage property for large corporations.
CB Richard Ellis (Charts) said the deal, which includes the assumption of debt, represents a 27 percent premium to Trammell Crow's (Charts) closing share price of $39.10 on Monday. It said the acquisition is expected to close either in late 2006 or early 2007.
"With the acquisition of Insignia in 2003, we achieved preeminence in our transaction business," Brett White, CB Richard Ellis' chief executive, said in a statement.
"Now the acquisition of Trammell Crow Co. creates the best-in-class corporate outsourcing and institutional property management business, and further augments our transaction business," White said.
As a result of the deal, CB Richard Ellis said its contractual revenues associated with outsourcing activities are expected to increase from approximately 8 percent to 18 percent of total revenues, based on 2006 expected results.
When the deal closes, Trammell Crow Chairman and CEO Robert Sulentic will join CB Richard Ellis as Group President. Trammell Crow's development and investment business also will become a wholly owned but independently operated subsidiary.
To finance the acquisition, CB Richard Ellis said it plans to issue $2.2 billion of term loans and amend or refinance its existing $600 million revolving credit facility. The company also plans to sell Trammell Crow Company's roughly 20 percent stake in Savills Plc, a British real estate services provider.
Upon completion of the deal, the company will have combined pro-forma 2006 revenues of around $4.4 billion and 21,000 employees, CB Richard Ellis said.
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