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CB Hires Team to Review Buyout Offer

Acquisition: A special committee will advise the real estate brokerage in the $340-million proposal.


CB Richard Ellis Services Inc. said Wednesday that a New York investment bank and a Los Angeles law firm have been hired to advise company directors in their review of a $340-million buyout offer.

Investment banker Morgan Stanley Dean Witter & Co. and law firm McDermott, Will & Emery will help review the bid and assist "in considering other proposals or alternatives," the Los Angeles-based company said in a statement. A company spokesman said the firm, one of the nation's largest commercial real estate brokerages, would not elaborate.

The special committee formed by the board of directors has not set a deadline for completing its review, but industry observers say it might take four to six weeks to respond.

The offer was made last week by a group that includes top executives and San Francisco-based Blum Capital Partners, which owns a stake in the company. Under the proposal, the group would buy each share of CB Richard Ellis for $15.50 in cash--for a total of about $340 million--and assume about $400 million in debt.

The offer was made as the stocks of publicly traded real estate services firms have languished on the market. Industry observers say investors are concerned about the company's prospects as real estate market activity slows down. It has also proved difficult for real estate service firms to deliver the predictable quarterly results most Wall Street investors demand.

Despite a run-up this month, CB Richard Ellis shares are trading far below their all-time peak of about $40 a share and their initial public offering price of $20. The firm went public in late 1996.

On Wednesday, CB Richard Ellis stock on the New York Stock Exchange remained unchanged at $15 a share.

Since the offer was announced last week, three lawsuits filed by shareholders claimed that the buyout proposal undervalues the firm. In one of the lawsuits, filed in Delaware Chancery Court, stockholder Viviana Cortes said the insiders, who own 38% of CB Richard Ellis, want to buy the remaining stock at a cut-rate price. She asked a judge to prohibit the transaction and award damages and legal fees.

In addition to Blum Capital, the group bidding for the firm includes CB Richard Ellis Chief Executive Ray Wirta; Brett White, chairman of the Americas for CB Richard Ellis; private investment firm Freeman Spogli & Co.; and Koll Holding Co., run by Don Koll, a director of CB Richard.

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