Day five of our EG Advent Calendar: The top most read story on EGi this year and it was all about M&A in the industry, but who would be next? There were few bigger than mergers than DTZ and Cushman’s trip down the aisle.
DTZ and Cushman & Wakefield are to join forces in a $2bn (£1.3bn) deal, catapulting them into the top tier of global agencies.
The combined firm, which will operate under the Cushman & Wakefield brand, boasts revenues of $5.5bn, making it the second largest real estate advisory firm in the world.
It will have a workforce of more than 43,000.
The two firms have long been considered a good fit for merger given DTZ’s strength in Asia and C&W’s position in America.
A deal was finally unlocked when DTZ was sold last year by UGL to a TPG-led consortium including the Ontario Pension Plan and PAG, giving the firm substantial firepower for acquisitions.
The new owners appointed former CBRE chief executive Brett White to help build DTZ into a top-tier brand and he will now take up the role as chairman and chief executive of the new firm.
White said: “DTZ is elated to be merging under the prominent Cushman & Wakefield brand. The companies have remarkably complementary skills and reach in different geographies – whether in New York, London or Shanghai, this will be a formidable combination.”
C&W’s owners, Italy’s Agnelli family, were persuaded to offer the company for sale by new chief executive Edward Forst, who undertook a comprehensive review of the business following his appointment last year.
The review recommended sale options be explored but concluded that a substantial portion of the company’s value lay in its brand and therefore a sale to a rival was expected to be ruled out on the assumption that the Cushman & Wakefield name would have to be dropped.
However, DTZ emerged ahead of a pack of bidders, including China’s Fosun, with the agreement to give up its own brand name likely to have helped secure a deal.
Exor, the Agnelli family’s investment vehicle, said the sale of C&W to DTZ would give it a return of $1.28bn for its 75% shareholding in C&W based on a sale valuation of $2.04bn, reflecting a $722m premium to its original investment in March 2007.
Last year C&W achieved earnings of $175.4m, up from $116m when Exor acquired its controlling stake.
Exor chairman and chief executive John Elkann said: “Our belief in the Cushman & Wakefield brand and our confidence in the outstanding professionalism of its people have been rewarded not only in the record performance delivered by Ed and the management team in 2014 but also in the ambition they have demonstrated to take the business into a new era of growth and development.”
TPG joint managing partner in Asia Ben Gray said the consortium that owns the newly combined firm would continue to grow the firm following the deal.
On completion of the merger, Carlo Barel di Sant’Albano, current international chief executive of Cushman & Wakefield and EMEA chief executive, will take a senior global leadership role. John Santora, currentchief executive of North America at Cushman & Wakefield, will become chief operating officer and chief integration officer, and Tod Lickerman, current global chief executive of DTZ, will assume the role of president of the global company.
The deal is expected to close before the end of the year.
Click here to read an exclusive first interview with the key players behind the deal >>
Read EG’s analysis of C&W’s options >>
jack.sidders@estatesgazette.com
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