A private equity group led by TPG Capital of the US is moving quickly to create what could be the world’s second-largest property consultancy by swooping in to acquire New York-based Cushman & Wakefield for a reported $2 billion.
According to a statement today from DTZ, which TPG acquired last year together with partners the Ontario Teachers’ Pension Plan and PAG Asia Capital Ltd, the company has reached a definitive agreement with Cushman & Wakefield to acquire the US company. After the merger, the two companies would be combined under the Cushman & Wakefield brand, except in China and the Netherlands, where the DTZ brand has historically been better known.
Combined, the 2014 revenues of DTZ and Cushman & Wakefield totalled more than $5 billion, which would rank the new mega-agency behind CBRE with $9 billion in 2014 revenue and rivalling JLL which had $5.4 billion.
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The new Cushman & Wakefield will have more than 43,000 employees worldwide and manage more than 370 million square metres of space.
“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,” said Brett White, who will assume the role of Chairman and Chief Executive Officer of the combined company.
White stepped down as the global CEO of CBRE in 2012 after leading a series of acquisitions that built the agency into the largest in the industry.
Now the merger man appears to have similar goals for DTZ/C&W. The TPG-led group only closed on its acquisition of DTZ in November, but already had acquired New York-based agency Cassidy & Turley by January.
The rebound in the US property market is the major motivator behind these acquisitions, with private equity firms seeing the real estate consultancies, which derive much of their revenue from commissions, as undervalued following the downturn.
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The acquisition by DTZ comes just over two months after Cushman & Wakefield was put up for sale by Exor, the investment arm of Italy’s Agnelli family, after the management of the agency pushed for more investment to scale up the operation.
Initially, Cushman & Wakefield indicated that it would not sell to a competitor, but despite reports of interest from China’s Fosun, it seems that the agency’s assets were not as valuable to investors outside the industry as they were to a competitor.
According to a statement from DTZ, upon completion of the merger, Tod Lickerman, current Global CEO of DTZ will assume the role of President of the global company; John Santora, while current CEO of North America at Cushman & Wakefield will become Chief Operating Officer and Chief Integration Officer.
Carlo Barel di Sant’Albano, current International CEO of Cushman & Wakefield and EMEA CEO, will take an unspecified senior global leadership role, and current C&W President and Chief Executive Officer Edward Forst will be leaving the company upon closing of the merger.
The transaction is expected to close before the end of the year and is subject to customary closing conditions.