JLL to buy HFF in $2bn deal

JLL has agreed to buy capital markets services provider HFF in a transaction valued at $2bn (£1.5bn). JLL will acquire all the outstanding shares of HFF in a cash and stock transaction, which has been approved by the boards of directors at both companies. Upon closing of the transaction, JLL shareholders are expected to own approximately 87% of the combined company, while HFF shareholders will retain around 13%. The deal is expected to complete in the third quarter of 2019, subject to HFF shareholder approval and customary closing conditions, including regulatory review. Mark Gibson (pictured right), chief executive of HFF, will join JLL as chief executive of capital markets in the Americas, as well as co-chair of its global capital markets board. Christian Ulbrich (left), global chief executive of JLL, said: “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. “The combination with HFF provides a unique opportunity to accelerate growth and establish JLL as a leading capital markets intermediary, with outstanding capabilities. “We have long admired HFF for its expertise and leading reputation in the industry, as well as its client-first culture of teamwork, ethics and excellence, which aligns with our own.” HFF and its affiliates operate out of 26 locations, including the UK. It is one of the largest commercial property capital markets intermediaries in the US. Since 1998, HFF has closed more than $800bn in more than 27,000 transactions, achieving record revenue in 2018 of more than $650m. Gibson said: “This is a terrific transaction for our shareholders, providing them with an immediate cash payment and the opportunity to participate in the long-term value of the combined company. “In addition, we believe the combination with JLL will create a superior platform for our shareholders, clients and employees than either company would have independent of the other and will significantly accelerate our firm’s strategic plan.” The terms of the agreement As part of the deal, 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 18 March, the cash and stock consideration to be received by HFF shareholders at closing is valued at $49.16 per HFF share. JLL intends to fund the cash portion of the purchase price consideration with a combination of cash reserves and its existing syndicated credit facility. All seven executive committee members of HFF have agreed to vote their shares, representing 3% ownership of HFF, in favour of the transaction. Key HFF senior leaders and capital markets advisers have entered into three- to four-year commitments related to employment, non-competition and retention. Strategic aims Through the deal, JLL aims to significantly bolster its US capital markets offer, as well as accelerate growth of its debt advisory business in Europe as well as the Asia Pacific region. Meanwhile, HFF will provide additional services to clients, including agency leasing, property management, valuations and project management services. To send feedback, e-mail pui-guan.man@egi.co.uk or tweet @PuiGuanM or @estatesgazette