XML 28 R12.htm IDEA: XBRL DOCUMENT v3.6.0.2
Acquisition of Global Workplace Solutions (GWS)
 12 Months Ended
Dec. 31, 2016
Business Combinations [Abstract]  
Acquisition of Global Workplace Solutions (GWS)

3. Acquisition of Global Workplace Solutions (GWS)

 

On September 1, 2015, CBRE, Inc., our wholly-owned subsidiary, pursuant to a Stock and Asset Purchase Agreement with JCI, acquired JCI’s GWS business (we refer to as the GWS Acquisition). The acquired JCI-GWS business was a market-leading provider of integrated facilities management solutions for major occupiers of commercial real estate and had significant operations around the world. The purchase price was $1.475 billion, paid in cash, plus adjustments totaling $46.5 million for working capital and other items. We completed the GWS Acquisition in order to advance our strategy of delivering globally integrated services to major occupiers in our Americas, EMEA and Asia Pacific segments. We merged the acquired JCI-GWS business with our existing occupier outsourcing business line, and the new combined business adopted the “Global Workplace Solutions” name.

 

We financed the transaction with: (i) a new issuance in August 2015 of $600.0 million in aggregate principal amount of 4.875% senior notes due March 1, 2026; (ii) borrowings in September 2015 of $400.0 million in aggregate principal amount of new tranche B-1 and tranche B-2 term loan facilities under our amended and restated credit agreement dated January 9, 2015 (2015 Credit Agreement); (iii) borrowings under our existing revolving credit facility under our 2015 Credit Agreement; and (iv) cash on hand. See Note 10 for more information on the abovementioned debt instruments.

 

The purchase accounting for the GWS Acquisition, including assignment of goodwill to our reporting units, has been finalized. There were no significant adjustments to the purchase price allocation recorded during the year ended December 31, 2016. The excess purchase price over the estimated fair value of net assets acquired of $796 million has been recorded to goodwill, with $406 million assigned to our Americas segment, $378 million assigned to our EMEA segment and $12 million assigned to our Asia Pacific segment. The goodwill arising from the GWS Acquisition consists largely of the synergies and economies of scale expected from combining the operations acquired from JCI with our business. Of the $796 million of goodwill recorded in connection with the GWS Acquisition, approximately $445 million is deductible for tax purposes.

 

The accompanying consolidated statement of operations for the year ended December 31, 2015 includes revenue, operating income and net income of $982.0 million, $27.7 million and $18.8 million, respectively, attributable to the GWS Acquisition. This does not include direct transaction and integration costs of $48.9 million and amortization expense related to intangible assets acquired of $24.2 million, all of which were incurred during the year ended December 31, 2015 in connection with the GWS Acquisition.

 

Unaudited pro forma results, assuming the GWS Acquisition had occurred as of January 1, 2014 for purposes of the 2015 and 2014 pro forma disclosures, are presented below. They include certain adjustments for the year ended December 31, 2015, including $47.5 million of increased amortization expense as a result of intangible assets acquired in the GWS Acquisition, $22.4 million of additional interest expense as a result of debt incurred to finance the GWS Acquisition, the removal of $48.9 million of direct costs incurred by us related to the GWS Acquisition, and the tax impact for the year ended December 31, 2015 of these pro forma adjustments. They also include certain adjustments for the year ended December 31, 2014, including $71.7 million of increased amortization expense as a result of intangible assets acquired in the GWS Acquisition, $38.1 million of additional interest expense as a result of debt incurred to finance the GWS Acquisition, and the tax impact for the year ended December 31, 2014 of these pro forma adjustments. These pro forma results have been prepared for comparative purposes only and do not purport to be indicative of what operating results would have been had the GWS Acquisition occurred on January 1, 2014 and may not be indicative of future operating results (dollars in thousands, except share data):

 

     2015      2014  

Revenue

    $ 12,972,810      $ 12,492,918  

Operating income

    $ 902,612      $ 734,571  

Net income attributable to CBRE Group, Inc.

    $ 581,807      $ 422,676  

Basic income per share:

      

Net income per share attributable to CBRE Group, Inc.

    $ 1.75      $ 1.28  

Weighted average shares outstanding for basic income per share

      332,616,301        330,620,206  

Diluted income per share:

      

Net income per share attributable to CBRE Group, Inc.

    $ 1.73      $ 1.26  

Weighted average shares outstanding for diluted income per share

      336,414,856        334,171,509