Business Context and Reporting Period
Company: CB Richard Ellis Group, Inc. (CBRE)
Filing Type: Form 8-K (Current Report)
Date of Report: February 15, 2011
Event: Entry into Material Definitive Agreements to acquire real estate investment management businesses from ING Real Estate Investment Management Holding B.V. (ING REIM).
Key Financial Metrics and Transaction Values
This filing details two proposed acquisitions with the following financial terms:
- CRES Transaction:
- Target: ING REI Clarion Holding, Inc. (CRES) and certain co-investment assets.
- Base Purchase Price: $330 million for CRES.
- Co-Investment Assets: Estimated at $55 million at market value.
- Total Estimated Consideration: Approximately $385 million (subject to adjustments).
- PERE Transaction:
- Target: ING REIM subsidiaries in Asia and Europe (PERE) and certain co-investment assets.
- Base Purchase Price: $610 million for PERE.
- Co-Investment Assets: Amount to be determined.
Financial Metrics: The filing does not provide current revenue, profit, cash flow, margins, debt, or liquidity figures for CBRE. It only discloses the proposed transaction values.
Material Changes and Conditions
The transactions represent a material expansion of CBRE's investment management capabilities. Key conditions and mechanics include:
- Price Adjustments: Purchase prices for both CRES and PERE are subject to adjustments based on the level of annualized fee revenue delivered at closing.
- Exclusions: The CRES acquisition excludes the Clarion Partners business unit, which ING REIM must sell or transfer prior to closing.
- Regulatory Approvals:
- CRES: Requires termination of the Hart-Scott Rodino waiting period and approvals from regulators in Germany and The Netherlands.
- PERE: Requires approvals from regulators in Germany, The Netherlands, the United Kingdom, and Hong Kong.
- Consents: Both transactions require investor consents to transfer minimum levels of annualized revenue.
Outlook, Risks, and Unusual Items
Termination Dates:
- CRES Transaction: Must be effectuated by November 15, 2011, or terminated.
- PERE Transaction: Must be effectuated by December 1, 2011, or terminated.
Risks and Contingencies:
- Failure to obtain necessary regulatory approvals or investor consents.
- Failure to meet minimum annualized revenue thresholds required for transfer.
- Non-compliance by ING REIM with material terms of the agreements prior to closing.
- Representations and warranties in the agreements are qualified by confidential disclosure schedules and may not reflect the current state of facts.
Investor Verification Checklist
- Verify the final purchase price adjustments based on actual annualized fee revenue at closing.
- Monitor the status of regulatory approvals in Germany, The Netherlands, the UK, and Hong Kong.
- Confirm the successful divestiture or transfer of the Clarion Partners business unit prior to the CRES closing.
- Review the definitive Share Purchase Agreements (Exhibits 2.01 and 2.02) for specific representations and warranties.
- Track the determination of the final value for the PERE Co-Investment Assets.