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Saturday, 30 May

It's a Goer - CBRE to Buy GWS for $1.475 Billion

The CBRE Group Inc. has just announced that it has entered into a definitive agreement to acquire the Global WorkPlace Solutions business of Johnson Controls, Inc.

GWS is a global provider of integrated facilities management solutions for major occupiers of commercial real estate and has significant operations around the world. The purchase price is $1.475 billion, payable in cash, or $1.3 billion net of the present value of estimated tax benefits and with customary post-closing adjustments for working capital and other items.

GWS will operate as part of CBRE’s Global Corporate Services (GCS) business, which has increased revenue at a double-digit compound annual growth rate over the last decade, as more major corporations and other institutions outsource their real estate services. When the transaction is completed, the full range of combined occupier services – notably including CBRE’s leasing expertise and GWS’s engineering expertise – will be available to the clients of both companies.

“The GWS team will greatly enhance our service offering for occupiers around the world,” said Bob Sulentic, president and chief executive officer of CBRE. “With GWS, we further our ability to create advantages for occupier clients by aligning every aspect of how they lease, own, use and operate real estate to enhance their competitive position.”

CBRE and Johnson Controls also announced a 10-year strategic relationship. CBRE will provide Johnson Controls with a full suite of integrated corporate real estate services (including facilities management, project management and transaction services) on more than 50 million sq.ft and Johnson Controls will offer a factory-direct relationship on HVAC equipment, building automation systems and related services to CBRE for its managed properties. In addition, the companies will jointly fund an innovation lab that will develop energy management solutions to lower costs and enhance their clients’ work environments. The joint innovation lab will evaluate, connect and leverage products, services and energy data to create value for occupiers and investors of real estate.

“Clients are increasingly asking us for fully integrated real estate and facilities solutions, which includes self-performing building technical services across their global portfolios,” said Bill Concannon, chief executive officer, GCS for CBRE. “GWS will improve our ability to serve clients in more than 50 countries with a capability in all services, industry sectors and property types. The GWS team is a great fit for our business. They bring leadership and expertise in many areas that are vital to our clients, including engineering excellence, global supply chain management, mission-critical facilities and energy management.”

GWS serves global corporations, particularly in the industrial/manufacturing, life-sciences, and technology sectors. Clients typically purchase services under five-year contracts. The average tenure for GWS’s 50 largest clients is 12 years.

Upon closing, John Murphy, GWS’s president, will join CBRE as global chief operating officer, GCS. “This combination will create a global market leader in the provision of value-added occupier services that enable clients to derive maximum value from their workplaces. Together, we will assure clients of high-quality, reliable, cost-efficient, comfortable and safe working environments no matter their core business mission,” said Mr. Murphy.

Together, CBRE and GWS will manage nearly 5 billion sq.ft. of real estate and corporate facilities globally, including 2.3 billion sq. ft. in the Americas, 1.2 billion sq.ft. in Europe, the Middle East & Africa and 1.4 billion sq.ft. in Asia Pacific.

Picture: A typical CBRE managed office

Article written by Brian Shillibeer

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