CB Richard Ellis Group, Inc. announces acquisition of Trammell Crow Company
Transaction valued at approximately $2.2 billion and expected to close either in late 2006 or early 2007
Dubai: November 7, 2006 -- CB Richard Ellis Group, Inc (NYSE:CBG) announced that the Company has entered into a definitive agreement to acquire Trammell Crow Company for $49.51 per share of common stock in cash. The acquisition will expand CB Richard Ellis’ global leadership and strengthen its ability to provide integrated account management and outsourcing solutions.
The transaction is valued at approximately $2.2 billion, including the assumption of
Trammell Crow Company’s corporate debt as well as transaction and integration costs. It is expected to close either in late 2006 or early 2007, subject to approval by Trammell Crow Company’s shareholders and federal regulatory agencies as well as other customary conditions.
Nicholas MacLean, Managing Director of CB Richard Ellis Middle East commented that with the acquisition of such a large organization specializing in corporate occupier services, the firm has under lined its commitment to helping its clients with a wide variety of occupation needs as a global basis. The organizations, for which Trammell Crow acts within the Middle East, are exactly complimentary to our existing and rapidly expanding client base.
Upon completion of the transaction, the Company will have combined pro-forma 2006 revenues of approximately $4.4 billion and 21,000 employees. It would be the first commercial real estate services company to qualify for the FORTUNE 500 list of the largest U.S. corporations. The combination of the two companies is expected to generate meaningful net expense synergy savings.
“Our strategic objective has long been to create the market-leading commercial real estate services firm delivering comprehensive solutions to our clients. Well targeted acquisitions have played a pivotal role in our strategy,” said Brett White, CB Richard Ellis’ President and Chief Executive Officer. “With the acquisition of Insignia in 2003, we achieved preeminence in our transaction business. Now the acquisition of Trammell Crow Company creates the best-in-class corporate outsourcing and institutional property management business, and further augments our transaction business. Trammell Crow Company is one of the premier service companies in our industry, with a rich history, dedicated employees and strong management, a stellar client base and core competencies that are highly complementary to our own.”
Trammell Crow Company provides integrated outsourcing solutions for a stable of prestigious corporate clients, and the combined company will provide services to more than 85% of the Fortune 100. As a result of the transaction, CB Richard Ellis’ contractual revenues associated with outsourcing activities are anticipated to increase from approximately 8% to 18% of total revenues, based on 2006 expected results.
Upon completion of the transaction, Trammell Crow Company’s Development and
Investment business will be run as a wholly owned but independently operated subsidiary. It will retain the highly valued Trammell Crow Company brand name. Robert E. Sulentic, Chairman and Chief Executive Officer of Trammell Crow Company, will join CB Richard Ellis as Group President with responsibility for the Development and Investment business as well as the Company’s EMEA and Asia-Pacific operations.
Cal Frese, CB Richard Ellis’ President, Americas Region, said: “We are excited about having the Trammell Crow Company team join with ours and its service offerings becoming a valuable part of our platform. Importantly, both companies have very similar and proud heritages that are embedded in their corporate cultures and which highly value integrity, work ethic and customer service excellence. We’ve had terrific success with integrating large service companies in the past, based on the idea of adopting the best people, processes and ideas of both companies, and we believe this integration will also succeed because of the similar cultures and business fit.”
The Company plans to issue $2.2 billion of term loans to finance the transaction, and will also amend or refinance its existing $600 million revolving credit facility. In addition, the Company plans to sell Trammell Crow Company’s approximately 20% ownership interest in Savills, plc, a real estate services provider in the United Kingdom. The Company’s initial view, to be refined at a later date, is that on a pro-forma basis, assuming the transaction had been completed on January 1, 2006, and after giving effect to the first-year expected net expense synergy savings and excluding one-time transaction and integration costs, the transaction would generate incremental percentage earnings accretion per share in the low teens.
Notes to editor:
About CB Richard Ellis
CB Richard Ellis Group, Inc. (NYSE:CBG), a FORTUNE 1000 company headquartered in Los Angeles, is the world's largest commercial real estate services firm (in terms of 2005 revenue). The Company serves real estate owners, investors and occupiers through more than 350 offices (including affiliate and partner offices) worldwide. CB Richard Ellis offers strategic advice and execution for property sales and leasing; corporate services; mortgage banking; investment management; appraisal and valuation; and research and consulting. Please visit our Web site at www.cbre.com.
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