LONDON (Reuters) - Global property services firm DTZ Holdings DTZ.L said on Tuesday it expected its 40 million pounds-plus takeover of rival Donaldsons to “significantly enhance” its coverage in Europe.
In a statement, DTZ said the transaction would reinforce its status as one of the world’s biggest property consultancies, ranked in the top two in the UK and top three in Europe.
The initial consideration of the Donaldsons takeover is being satisfied by 20.4 million pounds cash, the issue of 1.71 million ordinary shares in DTZ Holdings, the issue of 10.1 million pounds of DTZ convertible loan notes and a deferred consideration of up to 8.8 million pounds.
The deal is one of the largest examples of consolidation involving property services firms since the parent companies of Insignia Richard Ellis and CB Hillier Parker merged in July 2003 to create CB Richard Ellis, the world’s largest property services provider.
It coincides with an unsettled period in Europe’s commercial real estate market. Average property yields have begun to plateau and hikes in interest rates have started to discourage prime real estate investment.
Despite the dip in investor confidence in the asset class, DTZ said it expected the deal to be “strongly earnings enhancing” from May 2008.
Mark Struckett, group chief executive of DTZ, said: “We see close cultural alignment...the strength that Donaldsons brings in the retail segment is of significant importance to us within the UK and continental Europe.”
The combined business will fully adopt the DTZ brand name from autumn 2007. Headquartered in London, privately-owned retail property specialist Donaldsons reported pre-tax profits of 12.6 million pounds on a turnover of 62.9 million for the year to 30 June 2006.