Metropolitan Life Insurance said Tuesday that it has agreed to purchase Irvine-based Century 21 Real Estate, the nation’s largest real estate franchise firm, from Transworld Corp. Both companies refused to disclose the price, but industry analysts have previously estimated the value of Century 21 at $125 million to $200 million.
The transaction would complete Transworld’s plan--begun last year with the spinoff of Trans World Airlines--to restructure and expand as a food and lodging business.
In turn, New York-based Metropolitan Life would gain a nationwide network for selling its financial services, including home mortgages and homeowner insurance.
According to officials of both companies, Transworld last Friday beat out two other contenders in sealed bidding and on Monday afternoon signed the sales agreement. The proposed sale still must be approved by regulators and Transworld shareholders at a meeting expected in mid-October.
The proposed alliance between the real estate franchiser and Metropolitan Life “looks like a marriage made in heaven,” Century 21 President Richard J. Loughlin said.
Sales of $64 Million
With about 6,500 independently owned franchise offices and 75,000 sales agents in the United States, Canada and Japan, Century 21 had sales of $64 million in 1984.
The company’s franchises sold 550,000 homes last year, or about 11% of those that changed hands in the United States last year. Century 21’s earnings accounted for more than 10% of Transworld’s pretax operating income of $173 million last year.
Loughlin said Metropolitan Life does not intend to change Century 21’s staff or management. Loughlin and Gary Cooper, Century 21’s executive vice president of operations, have agreed to stay on, he said.
The affiliation with Metropolitan Life is expected to help Century 21 increase its market share in the fiercely competitive real estate brokerage business by giving it access to a variety of financial services.
In addition to its real estate sales business, Century 21 started offering mortgages, insurance and real estate syndication activities in 1983.
But the cost of attempting to build a financial-services system from scratch hurt the growth of Century 21’s pretax earnings, which were $20 million last year, virtually the same as the year before.
The Century 21 purchase is the latest of several for Metropolitan. Within the last 18 months, it has acquired CrossLand Capital in Los Angeles and MetFirst Financial in Oklahoma City. Both firms are in the mortgage business.
“Century 21 will serve as one cornerstone of a full range of financial relationships between home buyers and Metropolitan,” John J. Creedon, president of Metropolitan Life, said in a prepared statement.
Charles J. Bradshaw, Trans-world’s president and chief operating officer, said that, after his company announced its interest in selling Century 21 last May, it received inquiries from 80 potential buyers, but in the end only three submitted written offers. He refused to name the other two bidders but said they also are financial-service companies.
Bradshaw said he would not disclose Century 21’s purchase price until proxy information is filed with the Securities and Exchange Commission early next month.
He said proceeds from the sale may be used to finance acquisitions such as Transworld’s pending $92.5-million purchase of Chicago-based Interstate United, which provides food to institutions, stadiums and state parks, or to repurchase 4 million shares of Trans-world stock on the open market.