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Front Page » Top Stories » Pros Cbrecrow Merger Will Hinge On Blending Of Corporate Cultures

Pros Cbrecrow Merger Will Hinge On Blending Of Corporate Cultures

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Written by on November 2, 2006

By Marilyn Bowden
Fallout from CB Richard Ellis’ planned $2.2 billion acquisition of competitive commercial real estate firm Trammell Crow Co. and the future of employees of both firms are uncertain though at least one competitor sees positive signs.

"Because this transaction hasn’t closed, we can’t break it down in terms of personnel and lines of business," Ted Carter, head of CB Richard Ellis brokerage services for South Florida, said several hours after the deal was revealed Tuesday. "But we are thrilled by the opportunity to build our platform.

"We’re particularly excited about their strengths in transaction management, corporate outsourcing and institutional expertise."

The deal, which awaits approval of Trammell Crow shareholders, would create a company with $4.4 billion in annual revenues and 21,000 employees, the top commercial brokerage on the Fortune 500 list of largest US corporations.

In South Florida, CB Richard Ellis completed more than 700 lease transactions last year totalling more than 6.9 million square feet and more than 200 sale transactions totalling more than 28.7 million square feet, Mr. Carter said, for a lease and sale total of more than $4.5 billion in value.

Local Trammell Crow executives were unavailable for comment. According to the company’s Web site, its corporate clients in Florida represent more than 30 million square feet of service business, including facilities management, transaction management and project management.

The acquisition looks like a good move for CB Richard Ellis, which has focused its strategic efforts in recent years on growth, said Edgar Jones, vice president of Rockefeller Group Development Corp. "Cultural melding is always the biggest challenge in these deals," he said.

"Corporate culture is a big part of the equation," Mr. Carter said. "We think both these firms have similar core values, and as this firm impacts the future economic growth of Miami, we will bring those values to bear on the marketplace."

The market will determine whether the move is a good one for the industry, said Dennis Olle, a partner at law firm Adorno & Yoss.

CB Richard Ellis’ stock rose $1.81 to $30.03 Tuesday, a 6.41% gain from Monday’s close. Trammell Crow shares rose $9.64 to $48.75, a 24.6% gain. The merger deal values Trammell Crow stock at $49.51.

Even if Trammell Crow stockholders approve the offer, the company’s directors would be obliged to consider other offers, Mr. Olle said.

"Merger agreements always have break clauses," Mr. Olle said. "Even if CB Richard Ellis were not the ultimate winner, they could get a fee just for being a stalking horse that in a deal of this size could be around $100 million."

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