US property analyst Will Marks of Bank of America welcomed the move today to take CB Richard Ellis private and said it was “unlikely” that an alternative bidder would emerge, write Robert Gibson and Jane Roberts.
Commenting on the announcement that the US’s biggest broker has received a management buyout offer of $15.50 per share valuing the company at $740m, Marks said it was “a very fair price for investors to sell at with earnings potentially declining.”
He felt that there was unlikely to be other bids tabled as there has been little alternative interest in the stock. The share price this year dipped in the summer to around $9 before climbing back in August to around $13, where it settled. In 1998, before all US real estate services stocks began to plummet, it was at $40.
Marks also said merger or acquisition activity was unlikely because CBRE is one of the biggest firms with a diversified portfolio, although CBRE is weak in New York, compared with quoted rival Insignia. He described CB Richard Ellis as the “best brand name in the real estate market”.
He also suggested that it is a course that other quoted real estate services companies should choose to follow. He said: “Given the seasonability and cyclicality of the industry it is not a good business to be publicly held, it’s a difficult business to predict – investors like to see earnings that grow quarterly and every year.”
“I think it indicates some great value in the sector the offer shows that the rest are undervalued substantially,” he added.
Stuart Scott, chairman of Jones Lang LaSalle, said JLL would not be following CBRE’s example: “Going private is not our reaction, although we understand how they feel. Our reaction is to keep soldiering on. We believe that we will demonstrate that we are a growing company and trust that the market will wake up to that.”
“There are some people who believe that this business does not suit being public. We think that if you believe you are in a business that can grow at 15% a year or more you should be public. We will carry on until we get demoralised.”
Joe Fitzpatrick CBRE spokesman said “We are unable to comment further at this time in light of legal and regulatory associated guidelines.”
EGi News 13/11/00
