TPG-backed DTZ said to prepare €1.8b bid for C&W

London-based DTZ is said to be preparing the launch of a $2 bn (€1.8 bn) offer to acquire rival firm Cushman & Wakefield in the latest attempt at consolidation in the property advisory sector.

According to news reports, DTZ is talking to lenders to drum up support for the acquisition which would likely involve a $1.3 bn loan as well as equity to be contributed by global private equity firm TPG, which owns DTZ.

DTZ was not immediately available for comment.

Bids for C&W are due at the beginning of May. Chinese investor Fosun International - which recently entered Europe with the acquisition of a trophy asset in Milan for €345 mln - is also said to have tabled a bid.

If DTZ succeeds in buying C&W, the new combine would be the second-largest real estate services firm in the world by revenue - bigger than JLL but still smaller than CBRE.

Both DTZ and TPG would contribute equity to the deal, according to reports. TPG formed a consortium with Hong Kong investment manager PAG, and Canada’s Ontario Teachers’ Pension Plan to buy DTZ for $1.22 bn in June 2014.

Since then, DTZ's business - which had been struggling during the crisis - has been revived. The company finalized the acquisition of US broker Cassidy Turley this past January, growing its annual revenues to $2.9 bn and its portfolio under management to 3.3 billion sq ft globally.

'C&W would be a very good fit for DTZ in terms of business,' said a source who wished to remain anonymous. In 2011, when DTZ was put up for sale, C&W was one of the few contenders before the Group picked Australia's UGL as favourite bidder. 'Now the roles are reversed but the complementarity is still there.'

Agnellis seek to sell out
Cushman & Wakefield, the largest privately owned commercial real estate agency in the world, was put up for sale in February by its owner, the Italian Agnelli family. Goldman Sachs and Morgan Stanley were appointed to find a buyer.

‘If a rival doesn’t buy it, I think a US private equity buyer will snap it up,’ said Joe Valente, head of research and strategy for the European real estate group at JP Morgan, at the time. ‘It’s a strong possibility, given Cushman’s strong presence in the US. The big ‘hole’ is Asia. I think whoever buys C&W is likely to tack on an Asian component.’

Huge interest in global real estate markets makes it hard to predict just how much C&W could fetch. ‘Nothing would surprise me on the price,’ said Valente. ‘If Exor paid around $500 mln for its initial stake and manages to sell it for $2 bn, that represents a massive nest egg.’

Given the strong interest in the real estate sector, the price fetched for C&W is expected to reflect a sharp uptick on the $565.4 mln that the Agnellis' holding company Exor paid for a 67.5% stake in 2008. It has since increased its stake to 81%. The firm’s employees hold the 19% of Cushman not owned by the Agnellis.

Headquartered in New York, C&W was founded in 1917 and currently has around 250 offices in 60 countries and more than 16,000 employees. In the nine months ended September 30, 2014, C&W reported an increase in gross revenues of nearly 20% to $1.98 bn from $1.66 bn a year earlier. Although C&W is the largest privately-owned real estate agency globally, it remains the third-largest overall, behind CBRE and JLL.