Apollo to buy real estate broker for $9bn

The New York-based private equity firm will acquire Realogy, the publicly traded owner of the Century 21 and Coldwell Banker franchises.

New York-based private equity firm Apollo Management has agreed to take real estate franchise company Realogy Corporation private in a deal worth approximately $9 billion (€6.9 billion), Realogy said in a statement.

The transaction value includes about $1.6 billion of debt and “other liabilities” of about $750 million.

The valuation takes into account the substantial pressures and uncertainties facing the residential real estate markets that may well continue for some time.

Henry Silverman, CEO, Realogy

Realogy, which spun off from real estate, hotel, car rental and travel franchise provider Cendant Corporation on August 1, currently trades publicly on the New York Stock Exchange under the ticker symbol “H”. The company’s stockholders will receive $30 in cash per share, an 18 percent premium to Realogy’sclosing price of $25.50 on Friday, December 15. The acquisition price is also 26 percent greater than the company’s closing share price since it became an independent entity.

“The valuation takes into account the substantial pressures and uncertainties facing the residential real estate markets that may well continue for some time,” Henry Silverman, Realogy’s chairman and chief executive officer, said in the statement.

Silverman will maintain his positions at Realogy until December 31, 2007. At that time, Richard Smith, currently the company’s vice chairman and president, will take over the position of chief executive officer. The company’s management will most likely remain in place, though no formal discussions about the matter have been held, the statement said.

Silverman is not taking part in the merger. He “will receive the same per share consideration for his shares and in-the-money options as other stockholders and optionholders under the merger agreement,” the statement said. “As with all other optionholders, all of Mr. Silverman’s out-of-the-money options will be cancelled.”

The agreement allows Realogy to pursue and review other proposals until February 14, 2007. Should the company decide to engage in another transaction with another party, it will pay a break-up fee of an undisclosed amount to Apollo.

Apollo has a long history with Cendant. In 1997, the private equity firm formed one of the predecessor companies to Realogy, National Realty Trust, which was later acquired by Cendant in 2002. In July 2005, Apollo also bought Affinity Acquisitions Holdings, Cendant’s marketing services division, for $1.8 billion. That business was accused of accounting fraud when under Cendant’s management.

Realogy, based in Parsippany, New Jersey, also provides real estate brokerage, relocation services and title services. The company’s business units include CENTURY 21, Coldwell Banker, Coldwell Banker Commercial, ERA, Sotheby’s International Realty, Cartus and Title Resource Group.

Apollo closed its sixth private equity fund, Apollo Investment Fund VI, in January. The fund raised approximately $12 billion, including its related co-investment entities.