Australia's UGL weighs DTZ spin-off

Sydney-listed UGL, owner of DTZ, may spin off the advisory services firm as part of a strategic review of the entire group.

On Tuesday, the Australian diversified services company said it was undertaking a strategic review with a view to finding an 'optimal corporate structure' following the 'significant' growth in UGL’s property business.

The property business now represents close to 50% of the company’s earnings following the successful integration of DTZ and the creation of a single global brand, and has outperformed initial expectations, management said.

The establishment of a global headquarters for DTZ in Los Angeles has recently led to a number of new key global contracts with various multinational corporations, it added.

UGL acquired DTZ in December 2011 for €90 mln. The company's other two business units are engineering and operations & maintenance.

'The review will assess the optimal corporate structure under which UGL should operate to deliver the best outcomes for all stakeholders,' UGL chairman Trevor Rowe said. 'Various alternatives from maintaining the current corporate structure, reviewing a potential structural separation or demerger of the company, as well as UGL's M&A strategy will be considered.'

UGL managing director & CEO Richard Leupen said: 'Our property business has grown significantly from the initial acquisition of KFPW in 2002 through to the acquisition of the trading operations of DTZ Holdings plc in 2011, to become a global leader in property services operating in 52 countries, employing 47,000 people worldwide and generating annual revenue of $2 bn (€2.3 bn). Organic growth has also been a key driver of the growth in our property business.'

Given the substantial scale both the property services and engineering businesses have now reached, Leupen said 'it is the right time to review UGL’s corporate structure to fully capitalise on the strong growth opportunities across the engineering and property services sectors'.