Apollo Management Acquires Realogy in $6.6 Billion Deal

Apollo Management, a New York buyout firm led by Leon Black, has agreed to purchase Realogy, the owner of Century 21 and Coldwell Banker real estate companies, for $6.6 billion. The deal, valued at $9 billion including debt, marks a possible sign that the US housing slump has touched bottom. Realogy, the largest US residential broker, has struggled in the weakened real estate market, but investors believe the housing market may be turning the corner.

Key Takeaways:

• Apollo Management will pay $30 per share for Realogy, an 18% premium to the closing price on Friday.
• The deal, valued at $9 billion including debt, is the largest leveraged buyout of a real estate company this year.
• Realogy, the largest US residential broker, has struggled in the weakened real estate market, but investors believe the housing market may be turning the corner.
• The purchase brings the total value of buyouts announced in the US real estate industry to about $70 billion this year.
• Realogy's CEO, Henry Silverman, will stay in his position until the end of next year and will be succeeded by Richard Smith, the deputy chairman and president.
• Silverman will not participate in the buyout and will receive payment for his 2.9 million shares and options.
• Realogy has about 15,000 employees and 300,000 affiliated brokers at units including ERA, NRT, and Sotheby's International Realty.

Statistics:

• The deal is valued at $9 billion including debt.
• Realogy has about 15,000 employees.
• Realogy has 300,000 affiliated brokers at units including ERA, NRT, and Sotheby's International Realty.
• Realogy's profit fell 42% in the nine months ending September 30 to $303 million.
• Realogy's revenue declined 8.4% to $5.06 billion in the nine months ending September 30.

Sources:

• Sharon L. Crenson and Daniel Taub, "Apollo Management Agrees to Buy Realogy in $6.6 Billion Deal," Bloomberg.