JLL Agrees to Acquire HFF for $2B in Massive Real Estate Brokerage Merger

HFF's headquarters are located at One Victory Park in Dallas.

CHICAGO AND DALLAS — JLL (NYSE: JLL) and HFF (NYSE: HF) have entered into a definitive agreement for JLL to acquire all outstanding HFF shares in a cash and stock transaction valued at approximately $2 billion. Chicago-based JLL, a giant in the commercial real estate industry with a total market cap of approximately $7.4 billion, is a professional services firm that specializes in real estate and investment management. Dallas-based HFF is a full-service commercial real estate financial intermediary.

Under the terms of the agreement, HFF shareholders will receive $24.63 in cash and 0.1505 JLL shares for each HFF share. Based on the closing price of JLL stock of $163.02 on March 18, the cash and stock consideration to be received by HFF shareholders at closing is valued at $49.16 per HFF share. When finalized, existing JLL shareholders are expected to represent 87 percent of shareholders, and existing HFF shareholders will make up the other 13 percent.

The transaction has been unanimously approved by the boards of directors of both companies. The deal is expected to close in the third quarter of this year.

Two years ago, JLL unveiled Beyond, its global strategic vision to drive long-term and sustainable growth. As part of Beyond, JLL hopes to double its capital markets business by 2025.

“We believe that this acquisition takes significant steps to achieving our vision,” says Christian Ulbrich, global CEO of JLL.

According to Ulbrich, JLL has entered three- and four-year employment agreements with key senior leaders and producers of HFF, though specifics of the agreements were not disclosed.

Mark Gibson, CEO of HFF, will join JLL as CEO of the capital markets division.

“Mark and his leadership team have a superb track record,” says Ulbrich. “Combining our teams will create a position of true industry leadership.”

Furthermore, JLL doesn’t expect HFF’s clients to feel negative effects from the merger.

“We anticipated little overlap in our current agency client base, which creates an opportunity to leverage HFF’s capital markets expertise while also providing HFF clients with access to JLL’s full fleet of global real estate services,” says Stephanie Plaines, CFO of Chicago-based JLL.

Mike Lipsey, president of commercial real estate consulting firm Lipsey Co., says he was surprised by the deal. However, he notes that the purchase also makes sense for both sides.

“It’s a huge acquisition,” says Lipsey. “But when you think about it, it’s a perfect acquisition.” Lipsey likened the companies to luxury cars and said it’s like “if Porsche was acquired by Mercedes-Benz. It is just two high-quality companies with fabulous capabilities.”

JLL’s stock price closed at $162.94 per share on Monday, March 18, down from $174.76 one year ago. HFF’s stock price closed at $46.51 per share Monday, down from $48.83 per share a year earlier.

— Alex Tostado

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