Australian engineering, construction and maintenance company UGL Limited has been selected as preferred bidder to buy DTZ, the struggling London-listed property services firm said this morning.
The selection of Australia-listed UGL completes a dramatic 24 hours for DTZ, which saw its share price crash 85 percent to 2.8 pence per share yesterday after revealing that unspecified bids for the company reflected a “minimal value” for the company.
By mid-morning today, shares had soared more than 40 percent to over 4 pence a share, even though it was reiterated that UGL had placed a minimal valuation on DTZ because of its large debt obligation.
Should a deal materialise, a combined DTZ and UGL could create “one of the world’s largest real estate services operations”, with approximately 24,000 staff working in 225 offices across 45 countries.
The acquisition of DTZ would see UGL’s existing real estate advisory, facilities and project management services grow into an operation with a combined 2011 revenue of about £1.2 billion (€1.4 billion; $1.9 billion) which would make it the third largest real estate services business globally.
It would also be a geographical fit for UGL given DTZ’s presence in Europe, the Middle East and Asia Pacific. Currently UGL best serves the Australian, New Zealand, North American markets although it too has a presence in the Middle East.
A sale to UGL would bring to a close a protracted period of uncertainty for DTZ which had been the subject of takeover speculation for years. In May, talks started with its biggest shareholder, the French family owned property company Saint George Participations (SGP) with a view to it being subsequently merged with France’s BNP Paribas Real Estate. SGP pulled out of the takeover in October blaming external economic uncertainties, after which DTZ instigated an official sale process stating there were a number of interested bidders.
UGL now has up to 6 December to determine its “firm intention” on a bid, DTZ said.