London Broker Savills to Buy Studley for U.S. Expansion
Savills Plc (SVS) agreed to pay as much as $260 million to acquire Studley Inc., a New York-based real estate brokerage that represents tenants, to expand in the U.S.
London-based Savills, which earned less than 1 percent of its revenue in the U.S. last year, will make an initial payment of $224 million and pay for the acquisition using a combination of cash, notes and shares, the company said in a statement today. The deal is expected to boost earnings in the first year.
Brokers are seeking to buy overseas firms as property investment rises and more buyers are willing to purchase assets outside their region. More than 70 percent of commercial properties sold in Europe in the first quarter were bought by foreign investors, compared with 45 percent in the same period last year, Colliers International said in an April 24 report.
The transaction “not only provides us with a significant platform for growth in the U.S., but also enhances our offering to clients worldwide,” Savills Chief Executive Officer Jeremy Helsby said in the statement.
Savills said the internal rate of return will be “materially” above its weighted average cost of capital.
A further payment of $25 million may be made to Studley’s staff in March 2018 if earnings growth targets are met in the three years through 2017, according to the statement.
Studley, which has 25 offices around the U.S., will be known as Savills Studley, the company said in a separate statement. Chairman and CEO Mitchell S. Steir will continue in that role at Savills Studley, while President Michael Colacino will remain in his position. The transaction is expected to be completed by the end of May.
To contact the reporter on this story: Neil Callanan in London at firstname.lastname@example.org
To contact the editors responsible for this story: Andrew Blackman at email@example.com Jeffrey St.Onge, Kara Wetzel