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Merger Opens Door to Europe for Cushman & Wakefield

September 16, 1998|MELINDA FULMER | SPECIAL TO THE TIMES

Underscoring the growing demand for global real estate operations, the country's second-largest brokerage firm, New York-based Cushman & Wakefield Inc., said Tuesday that it has completed a $112-million merger with a major European real estate firm.

The merger with Healey & Baker of London, Cushman's joint venture partner of eight years, gives the brokerage company a large presence in the recovering European real estate market and the ability to compete for big multinational corporate clients with Los Angeles-based CB Richard Ellis Services Inc., which completed a similar merger earlier this summer.

"Our clients are very concerned with the delivery of real estate services in a consistent manner around the globe. Companies want to know they can call their account manager and get a small deal done in Italy and a big deal done in Hong Kong," said John B. Coppedge III, who oversees Cushman's international operations. These clients, he said, expect real estate companies to operate their own offices.

The combined company, which will keep its name and continue to be headed by Cushman Chief Executive Arthur Mirante, will have 7,700 employees in 129 offices in 39 countries. Currently, Cushman operates offices in 45 U.S cities, Mexico and South America and has an association with 11 real estate offices in Canada.

Under the terms of the deal, Cushman's parent, Rockefeller Group Inc., an entity owned by Mitsubishi Estate Co., will pay the partners that own Healey $112 million. About 35% of that will be used by those executives to purchase shares in Cushman & Wakefield Worldwide, giving them a stake of just under 20%, Coppedge said. It will also give the company majority control of the venture's Asian operations.

The two companies already do about 100 real estate transactions a year together, but Coppedge expects that number to grow, along with its domestic business as large computer companies, finance firms and other multinational firms choose the expanded brokerage.

However, since many large-scale international real estate company mergers are new or pending, analysts say, it is unclear whether Cushman & Wakefield's investment in international operations is worth the price it paid.

"It's way too early to tell how it's working out," said James Wilson of Jefferies & Co. in San Francisco.

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