CB Richard Ellis to Keep Managers
The San Francisco investment group that plans to buy CB Richard Ellis Services Inc. said it will retain the top managers and strategy of the giant Los Angeles-based real estate brokerage and services firm.
“There are no changes planned,” said Claus Moller, managing partner at Blum Capital Partners, which is headed by financier Richard C. Blum. “We are completely backing the existing management team and the existing strategy.”
Four years after it went public, CB Richard Ellis agreed Saturday to a sweetened buyout bid from a group that includes Blum, the Los Angeles investment firm Freeman Spogli & Co. and the real estate firm’s top management. Under the deal, the Blum group would pay $350 million in cash, or $15.50 a share, for CB Richard Ellis and assume an estimated $400 million in debt. The bid made by the group in November was for $15 a share.
On the New York Stock Exchange, CB Richard Ellis shares rose $1.55 to close Monday at $15.45, a gain of more than 11% from its previous close.
The buyout, which still must be approved by shareholders, would make CB Richard Ellis the most recent addition to the vast and diverse investment portfolio controlled by Blum, who is married to U.S. Sen. Dianne Feinstein. Blum and his firm have over the years invested in firms ranging from Northwest Airlines to an Internet company hoping to break into the Chinese market.
Blum sees opportunity in a company whose stock has languished on Wall Street along with those of many other real estate firms. Investors have had difficulty figuring out what to expect from real estate stocks because many public companies have a relatively short record on which to predict performance. Many real estate stocks remain small and thinly traded, meaning big institutional investors pass them up because they are considered riskier than more widely owned stocks.
“We see a company that is a world leader in its field,” said Moller. “It has a 100-year-old franchise and a global platform from which it can continue to grow.”
Officials from CB Richard Ellis declined to be interviewed.
CB Richard Ellis, which raised nearly $90 million from its initial public stock offering, has grown rapidly into an international company with about 10,000 employees through mergers and acquisitions. But the firm’s new focus on quarterly results, a growing bureaucracy and what many considered a less entrepreneurial culture led many brokers to jump ship for what they believed were more focused and faster-moving rivals.
“The culture changed quite a bit over the years,” said David Toomey, who in 1999 left CB Richard Ellis after 13 years to join CRESA Partners, a specialist in tenant representation. “You had a lot more levels of decision makers. It’s difficult for a public company to be nimble given the constraints.”
