Realogy (Owners of Coldwell Banker, Century 21, and Sotheby Intl Realty) to Be Sold For 9 Billion

The Apollo Group is paying nearly 9 billion for the real estate company, Realogy, which formerly was a part of Cendant. The private equity firm made the decision to buy, and Realogy the reason to sell, because fears the stock market would punish the company for earnings issues that will face it over the next few years.

Management of Realogy, including Henry Silverman, determined that the company will not hit the earnings levels of 2005 until at best 2009, and theat the markets would punish the company too much for it to be effective. Being in private hands would be the best place for Realogy in the near term.

The deal marks the latest play by private equity firms to buy into the real estate business just as it appears to have peaked. Just two weeks ago, Blackstone Group led a $36 billion deal to acquire Equity Office Properties Trust, the nation’s largest office building owner and manager, for about $36 billion, which was the biggest buyout in history.
The deal will be another huge payday for Henry R. Silverman, the architect behind Cendant, the conglomerate that Realogy was part of until it broke itself into four pieces earlier this year in an effort to revive its flagging stock price.
Mr. Silverman, who had been criticized for huge paydays while he was at Cendant, stands to make about $135 million by selling all of his shares and stock options as part of the deal. Mr. Silverman, who is now the chairman and chief executive of Realogy, is expected to stay on until his contract expires at the end of next year. However, Mr. Silverman will not be an equity participant with Apollo in the deal, and his out-of-the-money stock options (those below the strike price) will be canceled. via the New York Times.

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