CBRE Group Inc. has agreed to pay $1.475 billion to buy a competitor in the property management field.
CBRE said Tuesday it intends to acquire the Global Workplace Solutions division of Johnson Controls Inc., a Milwaukee technology company founded in 1885 with the invention of the thermostat to regulate indoor temperatures.
Its Global Workplace Solutions group has 16,000 employees who manage property for clients in 75 countries. Together, CBRE and GWS will manage nearly 5 billion square feet of real estate and corporate facilities globally.
The agreement includes a 10-year strategic relationship between the two companies. Johnson Controls will be the preferred provider of heating and air conditioning building automation systems and related services to the properties managed by CBRE and GWS. That arrangement is expected to generate $500 million a year for Johnson Controls.
CBRE is best known as a broker of sales and leases of commercial real estate such as offices, warehouses and shopping centers. In recent years it has expanded its property management services to grow revenues and provide reliable income to the company that is not dependent on real estate cycles.
"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 President Bob Sulentic said in a statement.
The deal is subject to approval by the federal Securities and Exchange Commission.