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DTZ announces intention to acquire remaining 20 per cent of DTZ Asset Management Europe SAS

13 Jul 2010

DTZ Holdings plc, a leading global real estate adviser, has today announced its intention for the DTZ Group ("Group") to acquire the 20 per cent of DTZ Asset Management Europe SAS ("AME"), that it does not already own. If the proposed acquisition is approved by DTZ's shareholders, AME will become wholly-owned by the Group.

DTZ Holding SA, a wholly-owned subsidiary of DTZ, has agreed the terms upon which, subject to prior approval by shareholders, it will acquire the 20 per cent of AME that is not already owned by the Group from Mr. Patrice Genre and Mr. Francois Brisset (together the "Sellers"), who each hold a 10 per cent interest in AME and whose management companies have management agreements with AME.  The consideration will comprise an initial cash payment of EUR 7.1 million, deferred cash consideration based on future profits of AME and a final deferred payment based on the market value of AME, taking into account sums already paid. The total consideration payable will be subject to a maximum of EUR 22.0 million.

In view of the shareholdings of the Sellers in AME and the fact that the Sellers, through their management companies, manage the business of AME, the acquisition by DTZ Holding SA of their aggregate holdings in AME is a related party transaction under the Listing Rules and is therefore subject to the approval of the shareholders of DTZ.

The deferred cash consideration payable to the Sellers will be calculated annually on the basis of AME's profit after tax ('PAT') starting on 1 May 2010 and continuing until the earlier of (i) the date of payment of the final deferred payment or (ii) 30 April 2018.  The deferred cash consideration payable to each of the Sellers until PAT reaches EUR 16 million will be 12.5 per cent of the annual PAT and thereafter, will be 20 per cent of PAT for PAT between 0 and EUR 2 million, 30 per cent of PAT for PAT over EUR 2 million up to and including EUR 6 million, and 25 per cent of PAT for PAT over EUR 6 million.

From 1 May 2015 up to 30 April 2018, either the Group or a Seller may require a final deferred payment to that Seller representing 10 per cent of the market value of AME (less consideration already paid to that Seller and any increase in net asset value of AME, plus an amount equal to 10 per cent of cumulative PAT from 1 May 2010 to the final deferred payment).

The Sellers, through their management companies, will continue to manage the business of AME and are expected to play a key role in the development of the asset management business of DTZ after the completion of the transaction. The transaction is structured with a view to retaining the motivation of the Sellers by linking part of the purchase consideration to future performance of AME.

The initial consideration will be funded from existing facilities and cash resources of DTZ.

Based on unaudited accounts for the year ended 30 April 2010, AME had fee income of £8.4 million and profit before tax of £0.3 million. As at 30 April 2010, AME had unaudited gross assets of £6.1 million and unaudited net assets of £3.2 million.

AME delivers a range of asset management services to its clients including real estate acquisition, financing, asset enhancement, letting services and disposals. Such services are provided in relation to single assets, portfolios of property assets, property debt and the shares of property holding companies. It currently operates in France, Germany, Belgium and Italy.

Asset management is a key business for the Group and a growth priority. The Group and the Sellers have been in discussions over an extended period in relation to the future development of AME and have concluded that it would be best facilitated by AME being wholly-owned by the Group. If approved by shareholders, the proposed acquisition will enable the Group to increase its ownership to 100 per cent and integrate the asset management business within its Investment and Asset Management business line.

The transaction is subject to shareholder approval and a circular will be posted to shareholders today. A general meeting will be held on 5 August 2010 at 125 Old Broad Street, London EC2N 2BQ. SAS Saint Georges Participations, as the holder of 52.57 per cent of the issued ordinary share capital of DTZ, has undertaken to DTZ to vote in favour of the acquisition.

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