GVA, the UK's largest independent commercial property adviser announced Bilfinger, the €8.5bn-turnover global engineering and services group, as its favoured strategic merger partner.
A memorandum of understanding has been agreed that will, subject to outstanding legalities and a shareholder vote, transform GVA's drive for major growth and significantly strengthen its ambitions to compete on the world stage.
Exchange of contracts and completion is expected before the end of June 2014. The transaction will involve a transfer of GVA's existing shares to give Bilfinger Real Estate 100% ownership.
Bilfinger, which is based in Mannheim and listed on the stock exchange in Frankfurt, Germany, employs 74,000 staff throughout its 14 divisions worldwide. The Bilfinger group is structured into four business segments - Industrial, Power, Construction and Building and Facility. Within Building and Facility, with its annual turnover of circa €2.3 billion and with 22,000 employees, sits its fast-growing Real Estate division with some 1,500 Real Estate professionals and an annual turnover of €160 million.
Bilfinger Real Estate has operations in Germany, UK, the Netherlands, Switzerland, Turkey, Poland, Canada and Australia. Its existing clients include RBS, Morgan Stanley, Credit Suisse, AXA, Union Investment and IVG.
Bilfinger Real Estate boasts integrated services and consultancy for Real Estate with a strong expertise in property, asset management and is committed to growing its transactional capability. With the combined organization well placed to grow this activity using both Bilfinger and GVA's existing client base.
GVA's UK brokerage capability offers huge value to Bilfinger Real Estate clients, captures equity at source and directly influences key portfolio decisions. These programmes will ultimately secure sale and lease instructions and broader consultancy advice, thereby helping to fulfil GVA's key ambition.
Like GVA, Bilfinger Real Estate's business is consultancy based and GVA's ambitions to rapidly increase its share of global mandates are matched by Bilfinger Real Estate's commitment to forming an international real estate consultancy.
The decision to work with Bilfinger Real Estate as GVA's preferred strategic merger partner follows the completion of a review by investment bank Canaccord Genuity, which commenced in October 2013, into GVA's options to enhance its medium to long-term growth.
This transaction will allow LDC, the private equity investor with a 27.5% stake in GVA, to exit. LDC's initial investment supported the company through a financial restructuring programme to help GVA secure access to external capital to undertake large acquisitions.
Rob Bould, Chief Executive at GVA, comments: "This hugely exciting deal marks the most significant and transformational milestone in the history of our company. It represents a major opportunity for GVA's future growth and prosperity.
"The strategic merger launches us on to the global stage, creating a partnership with Bilfinger Real Estate that immediately competes with the world's biggest real estate advisers for global mandates.
"The combination of the established GVA UK platform and reputation, and Bilfinger Real Estates reach and resources, creates a challenger brand that is consultancy based. The creation of a new, leading brand also allows us to recruit and retain the best staff."Bould continues: "We chose Bilfinger Real Estate as our preferred partner over other suitors with varying propositions. Three factors stood out in Bilfinger:
"First, its makeup and structure offers us limitless opportunities to be a part of a business that can truly compete on an international stage, gaining access to key European and emerging markets throughout the world.
"Second, its financial strength gives us the longer term security essential to our culture, and in maintaining our strong balance sheet.
"Finally, while Bilfinger Real Estate gives us great international exposure, its limited UK presence means GVA's existing business can provide a ready-made platform for Bilfinger Real Estate's expansion."
Aydin Karaduman, CEO at Bilfinger Real Estate, comments: "This deal is part of a strategic plan to develop a leading international real estate consultancy and management offer with representation in every major commercial center in the world."
Rob Bould adds: "The service we provide our clients will very much remain the same. There will be no change to our team structures or to our office locations. Nor will our brand, which represents huge capital value, change immediately. Our brand will evolve over a matter of years, not months. However, it's equally critical to convey that our partnering with Bilfinger Real Estate combined with LDC's exit will offer a hugely exciting opportunity for clients and an unprecedented prospect for us to create a truly international dimension to our UK-facing business."