Grubb & Ellis Calls Off Merger Talks; Stock Tumbles

Commercial real estate brokerage Grubb & Ellis Co. on Friday said it had called off merger negotiations with an unidentified company--widely believed to be Los Angeles-based CB Richard Ellis Inc.--over concerns about employee layoffs and other issues.

The announcement sent shares of Grubb & Ellis tumbling on Wall Street. On the New York Stock Exchange on Friday, Grubb & Ellis stock fell 90cents--or about 23%--to $3 a share.

The New York-based real estate services firm said it began merger discussions after the “unrelated third party” made an unsolicited merger proposal this month. However, according to Chief Executive Barry Barovick, Grubb & Ellis terminated the talks after it became clear that the companies differed on key issues and had “significant overlaps of personnel and locations, which led us to believe that too many of our personnel ... would not be retained.”

A spokesman for CB Richard Ellis said it had no comment.

Last week, Grubb & Ellis said in a government filing that a change in control could be expected in the wake of a deal with a group headed by board member C. Michael Kojaian, a Detroit developer. In return for an investment of $15.2 million, the Kojaian group ended up with a 20% stake in the company.