DALLAS - CBRE Group, Inc. (NYSE:CBRE) has entered into a definitive agreement to purchase J&J Worldwide Services, a key provider of engineering and facilities maintenance services to the U.S. federal government. The acquisition, announced today, involves an $800 million cash transaction with an additional earn-out potential of $250 million based on future performance.
J&J Worldwide Services, currently owned by Arlington Capital Partners, is expected to generate over $525 million in revenue and approximately $65 million in EBITDA for 2024. The acquisition is projected to contribute positively to CBRE's earnings within the same year, with added benefits from tax attributes and synergies.
The company, which has a workforce of over 3,300, has established a significant presence, serving more than 250 healthcare and military facilities across the globe. Their long-term contracts with the U.S. Department of Defense, particularly fixed-price agreements, have been a cornerstone of their business model.
CBRE's CEO, Bob Sulentic, highlighted the acquisition's alignment with the company's M&A strategy to enhance technical services, increase revenue resilience, and expand the government client base within its Global Workplace Solutions segment.
The acquisition is subject to regulatory approvals and customary closing conditions, with the completion expected in the coming months. Citi is serving as CBRE's financial advisor, with legal counsel from Simpson Thacher & Bartlett LLP and ArentFox Schiff LLP. J.P. Morgan Securities LLC is advising J&J, with Sheppard Mullin Richter & Hampton LLP as legal advisor to both J&J and Arlington Capital Partners.
This move by CBRE, a leading commercial real estate services firm, signifies a strategic step to broaden its portfolio and deepen its government services capabilities. The information for this report is based on a press release statement.
InvestingPro Insights
As CBRE Group, Inc. (NYSE:CBRE) prepares to integrate J&J Worldwide Services into its operations, investors are closely monitoring the company's financial health and market performance. According to recent data, CBRE boasts a robust market capitalization of $25.28 billion, signifying its substantial presence in the real estate sector. Despite a slight revenue growth of 0.03% over the last twelve months as of Q1 2023, the company has shown a more impressive quarterly revenue growth of 4.5% in Q1 2023, reflecting potential upward momentum that could be bolstered by the J&J acquisition.
InvestingPro Tips reveal that CBRE management has been actively buying back shares, a sign of confidence in the company's value. Additionally, CBRE is recognized as a prominent player in the Real Estate Management & Development industry. It's noteworthy that while CBRE is trading at a high earnings multiple with a P/E ratio of 44.97, it also trades at a low revenue valuation multiple, which may indicate an attractive investment opportunity for those looking at revenue-based valuations.
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