July 4, 2007 / 8:08 AM / 12 years ago

UPDATE 1-DTZ in talks to buy Donaldsons, profit leaps

(Adds details, analyst comment, shares)

LONDON, July 4 (Reuters) - Property adviser DTZ Holdings Plc DTZ.L posted record annual results and said it had bought two European businesses and was in talks to buy privately owned rival Donaldsons LLP, sending its shares up over 7 percent. Riding a boom in buoyant European and Asian property markets, DTZ reported on Wednesday a 41 percent rise in pretax profit to 41.8 million pounds ($84.3 million) for the year ended April, as revenue rose 33.5 percent to 310.3 million pounds.

“This move is consistent with DTZ’s strategy of developing its business across key markets, and, if completed, would further consolidate the company’s position as a premier real estate adviser in Europe,” it said in a statement.

DTZ declined to give the potential value of the deal with Donaldsons, which the media have speculated to be worth around 55 million and 65 million pounds.

Established in 1869 by Henry Donaldson at the age of 19, privately held Donaldsons offers property survey and consulting services in 20 countries across Europe.

Its clients include British bank Barclays (BARC.L), property firm British Land (BLND.L), retailer John Lewis Partnership [JLP.UL] and Morley Fund Management.

By 0710 GMT, shares in DTZ, which operates in 45 countries, rose 5.9 percent to 549-1/2 pence, after trading as high as 556p.

“Results are slightly ahead of expectations, with the company making good progress across the group,” JPMorgan Cazenove analysts said.

“DTZ is more diverse in terms of location meaning that it is less reliant on the state of the UK property market. It also covers a wide range of skills, reducing the dependency on transactional based fees.”

Britain’s property services industry has seen a pick-up in deals this year, with property agency Countrywide Plc being taken over by U.S. private equity firm Apollo for $2.1 billion, as residential market continues to roar ahead and investment sector remains healthy.

DTZ raised its final dividend to 8 pence per share from 7p a year ago, making a total dividend of 11.5p, up 17.9 percent.

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