CBRE ups bidding to $1.79B deal for TCC.

CB Richard Ellis Group, Inc has upped the ante in the charge to dominate global real estate with its $1.79 billion acquisition of Trammell Crow Company last week.

The merger of the two firms will create a workforce 21,000 strong and take combined revenues to over $4 billion, propelling CBRE into the FORTUNE 500 list of the largest US corporations--the first commercial real estate services firm ever to do so. Combined, the company will provide real estate services to more than 85% of the Fortune 100.

While TCC has said the sale is the best deal for shareholders who will received $49.51 in cash for each share of common stock they hold, CBRE is likely looking to cash in on the Dallas-based firm's stronghold in the asset management sector where it has quadrupled its business in the last three years.

Brett White, CB Richard Ellis' president and chief executive officer, commented, "With the acquisition of Insignia in 2003, we achieved preeminence in our transaction business. Now the acquisition of Trammell Crow Company creates the best-in-class corporate outsourcing and institutional property management business, and further augments our transaction business."

White added, "Our strategic objective has long been to create the market-leading commercial real estate services firm delivering comprehensive solutions to our clients. Well targeted acquisitions have played a pivotal role in our strategy.

"Trammell Crow Company is one of the premier service companies in our industry, with a rich history, dedicated employees and strong management, a stellar client base and core competencies that are highly complementary to our own."

Assumption of the Dallas-based TCC debt plus transactions costs will push the total cost to CBRE to $2.2 billion which, it said in a statement, it will cover in term loans and amendment to its existing $600 million revolving credit facility. CBRE also plans to sell Trammel's ownership stake in the UK-based Savills real estate firm.

The deal is expected to close either in late 2006 or early 2007, subject to approval by Trammell Crow Company's shareholders and federal regulatory agencies as well as other customary conditions. Trammell Crow Company provides integrated outsourcing solutions for a stable of prestigious corporate clients. As a result of the transaction, CB Richard Ellis' contractual revenues associated with outsourcing activities are anticipated to increase from approximately 8% to 18% of total revenues, based on 2006 expected results.

Upon completion of the C transaction, Trammell Crow Company's Development and Investment business will be run as a wholly owned but independently operated subsidiary. It will retain the Trammell Crow Company brand name.

Robert E. Sulentic, chairman and chief executive officer of Trammell Crow Company, will join CB Richard Ellis as group president with responsibility for the development and investment business as well as the company's EMEA and Asia Pacific operations.

Cal Frese, CB Richard Ellis' president, Americas Region, said: "Both companies have very similar and proud heritages that are embedded in their corporate cultures, and which highly value integrity, work ethic and customer service excellence.

"We've had terrific success with integrating large service companies in the past, based on the idea of adopting the best people, processes and ideas of both companies, and we believe this integration will also succeed because of the similar cultures and business fit."

Cushman & Wakefield, which has been actively growing its business with a series of strategic mergers and acquisition of its own, reacted positively to the new of the Trammel Crow sale.

"This acquisition represents an enormously positive statement about investor confidence in the commercial real estate services industry," said a spokesman. "It also represents a greater opportunity for Cushman & Wakefield to aggressively and strategically grow its business, by leveraging the industry's best brand and global platform against a smaller competitive field."

Despite the flurry of recent mergers and acquisitions in the commercial real estate industry, it is still highly fragment and opportunities still exist to increase market share, opportunities C&W is likely to grab.

Added the spokesman, "There will be further consolidation in the industry at large, and Cushman & Wakefield will continue to look at opportunities to strengthen its platform as it has recently through strategic acquisitions in Russia, Canada, Mexico and London."