Fresh from completing its merger with a major property management firm, CB Commercial Real Estate Services Group agreed last week to add an international real estate services company to its operations.
L.A.-based CB Commercial’s acquisition of London-based REI Ltd., a holding company that operates its branches under the name Richard Ellis, will give CB a presence in 31 countries. The combined company will have almost 8,000 employees in 200 offices with combined annual revenues of more than $800 million.
The new firm expects to operate under a yet-to-be-announced name that will reflect the combination of CB Commercial and Richard Ellis. The deal is subject to shareholder approval; a vote is slated for April.
“This acquisition gives us the ability to create the first commonly known, commonly managed global real estate operation,” said James Didion, chairman and chief executive of CB Commercial.
Didion said the proposed merger was prompted by the need to provide service to corporate clients with real estate needs in several countries. Both companies handle leasing and investments in the office, retail and industrial sectors.
Terms of the transaction were not disclosed, but Didion called the estimated purchase price of $100 million in cash and stock, as reported in the Wall Street Journal, “aggressive.”
CB Commercial, the nation’s largest commercial real estate brokerage firm, had revenues of $662 million for the fiscal year ended Sept. 30. The REI purchase, if approved, will boost its annual revenues by $110 million, according to CB Commercial.
CB has been expanding aggressively since it went public last year. It acquired Newport Beach-based Koll Real Estate Services, one of the country’s largest property managers, for $160 million earlier this year.
The REI deal is not expected to cause many changes at the L.A. headquarters of CB Commercial. Didion will remain chairman of the combined company, and he said the new firm might hire more people to handle its expanded operations.
CB’s network of international alliances that existed prior to the merger which worked much like a referral system have all been terminated, Didion said.
“CB Commercial couldn’t share in the equity in that system,” Didion said. “This transaction better benefits our company and our shareholders.”
