Last week DTZ’s share price plunged; this week BNP Paribas’ surged. The events that drove both could hardly be less connected. Nevertheless, the recovery of the latter may be good news for the former.
Reports that one of DTZ’s main lenders, Royal Bank of Scotland, was lining up accountant Ernst & Young to advise on its £87m debt drove DTZ’s share price down to 26.5p last week, though it recovered almost all its lost ground this week.
Across the channel, BNP Paribas’ share price plunged to a two-and-a-half-year low last week on macro economic fears, before adding 30% this week on speculation that the region’s governments will step up efforts to contain the sovereign-debt crisis. (I have to say it feels pretty far from contained from where I sit, but that’s by the by.)
None of that should be an issue for DTZ, of course, but it is. The firm remains in discussion with majority shareholder SGP about its future. SGP has been seeking since May to buy and flip the business to BNP Paribas. The world this autumn is very different to the halcyon days of spring, however. And getting the attention of the French banking giant during the biggest crisis to afflict the eurozone since its creation is getting harder by the day.
So will a share price recovery be enough to refocus BNP’s attention on giving the green light to subsidiary BNP Paribas Real Estate to acquire DTZ? It’s unlikely in the short-term. And it’s unlikely to happen before 17 October.
That’s the deadline, under new UK Takeover Code rules, for SGP to make a formal takeover offer for DTZ, or to confirm that it will not do so. It is then barred from submitting a further bid for six months unless, and seldom has that word been so significant, DTZ tells regulators it is receptive to another approach.
Given that caveat, the 17th has little bearing on an offer from SGP. It is more significant for the other bidders. Come 18 October, other mooted parties will no longer be competing with a majority shareholder whose deeper understanding of the business had left it holding all the cards. So the likes of Australian services giant UGL, BCG Property Management from the US and international property adviser network NAI Global may feel ready to play their hands.
There may be others too. Will a CBRE – or indeed CBRE itself – be inclined to join the party at this stage? Don’t rule it out, whatever DTZ’s rivals say.
Meanwhile, some doommongers predict the demise and fragmentation of the firm.
Nothing is certain, but let’s hope they are wrong.
Mixed signals from the auction room. The summer has seen lot numbers, volumes and sales all drop. Properties sold at auction in July fell almost 20% on May levels, according to the latest Commercial Property Auction Data review from Acuitus and IPD. Yet year-to-date auction sales rates are now above 80% and in line with the long-term average. Meanwhile, yields are moving out, value growth opportunities are thin on the ground and London is holding up better than the regions. Not for the first time sentiment in the auction room is a strong indicator of where the wider market is at and where it’s heading.
Now here’s an indication of sentiment. Last Thursday, Estates Gazette held two conferences. In the morning an investment summit; in the afternoon a distressed property event. And attendance? You’re ahead of me here. We had to move more chairs and tables into the room at lunchtime – twice as many in fact.
For more on the events – and especially to hear the view of speakers from Lloyds and RBS, see this week’s feature.
