JLL to Buy HFF in $2 Billion Deal
Real estate and investment management firm Jones Lang LaSalle Incorporated (NYSE: JLL) is planning to purchase HFF Inc. (NYSE: HF) in a cash and stock deal valued at approximately $2 billion.
Real estate and investment management firm Jones Lang LaSalle Incorporated (NYSE: JLL) is planning to purchase HFF Inc. (NYSE: HF) in a cash and stock deal valued at approximately $2 billion. The transaction, which is expected to close in the third quarter of 2019, has been unanimously approved by the boards of both companies.
HFF is one of the country’s largest commercial real estate capital markets intermediaries and has closed more than 27,000 transactions totaling $800 billion since 1998. The company’s revenue topped more than $650 million last year, a record for the company.
Mark Gibson, chief executive officer of HFF, will join JLL as CEO of capital markets, Americas and co-chair of its global capital markets board.
JLL claims that the transaction will bolster its full-service capital markets services to clients, accelerate growth of its debt advisory business in Europe and Asia Pacific, and drive operating efficiency globally.
“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,” said Christian Ulbrich, Global CEO of JLL. “The combination with HFF provides a unique opportunity to accelerate growth and establish JLL as a leading capital markets intermediary, with outstanding capabilities.”
Under the terms of the agreement, 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.
The share price represents a premium of approximately 22 percent and 25 percent compared to the volume weighted average price of HFF over 60 and 90 trading days, respectively, and a premium of approximately 6 percent over the closing stock price on March 18, 2019 (before the impact of the $1.75 per share special dividend declared on January 31, 2019 and paid on February 27, 2019).
When the transaction closes, JLL shareholders are expected to own approximately 87 percent of the combined company, and HFF shareholders are expected to own approximately 13 percent.
All seven executive committee members of HFF have agreed to vote their shares, representing 3 percent ownership of HFF, in favor of the transaction. Key HFF senior leaders and capital markets advisors have entered into three-to-four-year commitments related to employment, non-competition and/or retention. JLL anticipates adding one of HFF’s existing directors to its board when the transaction closes.
JLL intends to fund the cash portion of the purchase price consideration with a combination of cash reserves and its existing credit facility. The companies claim that the combination is expected to deliver run-rate synergies, estimated at approximately $60 million over two to three years.
JLL shares closed at $160.49. on Tuesday, and HFF shares closed at $49.01.
JLL is a Fortune 500 company with annual revenue of $16.3 billion, operations in more than 80 countries and a global workforce in excess of 90,000 as of December 31, 2018.
