JLL is to buy US capital markets intermediary HFF, accelerating the growth of its debt advisory business in Europe and Asia Pacific in a deal worth around $2 bn (€1.76 bn), the real estate services provider said on Tuesday.
The transaction will also allow JLL to increase the scale of its US capital markets business and drive increased operating efficiency globally. JLL’s global chief executive said the deal will ‘significantly accelerate our firm’s strategic plan’.
The transaction, unanimously approved by both companies’ boards, will involve JLL acquiring all the outstanding shares of HFF in a cash and stock transaction.
HFF provides financial services to commercial real estate companies, including advisory services, investment banking, structured financing and the closing and maintenance of loans. It is one of the US’s largest commercial real estate capital markets intermediaries and has closed more than $800 bn in over 27,000 transactions. It achieved record revenue in 2018 of more than $650 mln, the company said. HFF CEO Mark Gibson will join JLL as CEO, capital markets, Americas and co-chair of its global capital markets board.
‘Increasing the scale of our capital markets business is one of the key priorities in our “Beyond” strategic vision to drive long-term sustainable and profitable growth. The combination with HFF provides a unique opportunity to accelerate growth and establish JLL as a leading capital markets intermediary, with outstanding capabilities,' said JLL's global CEO Christian Ulbrich (pictured).
HFF shareholders will receive $24.63 in cash and 0.1505 JLL shares for each HFF share. Based on the closing price of JLL stock of $163.02 on March 18, 2019, the cash and stock consideration to be received by HFF shareholders at closing is valued at $49.16 per HFF share.
On completion, JLL shareholders are expected to own around 87% of the combined company, and HFF shareholders will own about 13%.
JLL will fund the cash portion of the purchase with cash reserves and its existing syndicated credit facility.
The combined company is expected to deliver savings of $60 mln over two to three years after the deal closes. The transaction is expected to close in the third quarter of 2019, subject to shareholder approval and regulatory review.
