FirstService Corporation (TSX:FSV) (Nasdaq:FSRV) ("FirstService")
today announced that its Board of Directors has approved, in
principle, a plan to separate FirstService into two independent
publicly-traded companies – "Colliers International," one of the
top three global leaders in commercial real estate and
"FirstService Corporation," the North American leader in
residential property management and services. After the separation,
FirstService Corporation will be comprised of the current
FirstService Residential and FirstService Brands divisions. Each
company generates strong cash flow, has compelling growth
opportunities and a long history of creating shareholder value. The
spin-off transaction, which is being structured as a tax-free
distribution to shareholders, will create two strong market leaders
with distinct brands, customers, operating characteristics and
industry dynamics:
- Colliers International has been the fastest growing commercial
real estate firm in the world over the past 10 years and is ranked
number 5 in the IAOP® annual list of Global Outsourcing 100
companies. It offers a full range of commercial real estate
services in the United States, Canada, Europe, Australia/New
Zealand, Asia and Latin America. For the year ended December 31,
2014, pro forma revenue, including contribution from acquisitions
completed during the year, totalled US$1.7 billion.
- FirstService Corporation established the first North American
platform in residential property management and through its
portfolio of well-known and market-leading franchise brands
provides a variety of property related services to residential and
commercial customers. For the year ended December 31, 2014, pro
forma revenue, including contribution from acquisitions completed
during the year, totalled US$1.1 billion.
"With significant insider ownership and an experienced
management team, FirstService has a long-term track record of
creating value and superior returns for shareholders since becoming
a publicly listed company in 1993," said Jay Hennick, Founder and
Chief Executive Officer. "For more than twenty years FirstService
shareholders have enjoyed a compound annual return of more than 20%
on their investment. In fact, $100,000 invested in FirstService
shares when we first listed is worth more than $3.2 million today,"
he added. "Over the past several years we continued to strengthen
and grow our company, expanding operations internally and through
acquisitions, extending our geographic reach, divesting non-core
assets and undertaking a significant re-branding initiative all
while maintaining a strong balance sheet and cash flows," he
continued. "Today we are taking the next bold, but logical, step in
unlocking even greater value for FirstService shareholders by
separating our company into two, billion dollar public companies,
Colliers International and FirstService Corporation," he
concluded.
The proposed transaction will be implemented through a
court-approved Plan of Arrangement (the "Arrangement") and is
subject to final approval from FirstService's Board of Directors.
FirstService expects that the Arrangement, when completed, will
result in the establishment of a new public company that will be
named FirstService Corporation ("FirstService Corporation") and the
current publicly traded company called FirstService will change its
name to Colliers International Group, Inc. ("Colliers
International"). The Arrangement is expected to be tax free to
shareholders. The intention is for both the subordinate voting
shares of Colliers International and FirstService Corporation to be
listed on the Toronto Stock Exchange (the "TSX") and the NASDAQ
Stock Market ("NASDAQ"), consistent with the current dual listing
of FirstService's subordinated voting shares. The Arrangement will
also be subject to regulatory, court and shareholder approvals.
Creating two separate and independent publicly traded companies
will enable each company and its shareholders to:
- Intensify its focus on core businesses and customers
- Pursue independent value creation strategies
- Implement distinct capital allocation strategies
- Attract appropriate investors and offer better comparability
with publicly traded peers
- Create two different and compelling investment
opportunities
Colliers International: A Global Leader in Commercial
Real Estate Services
We expect Colliers International to create shareholder value by
leveraging its position as a top three global leader in the dynamic
commercial real estate services industry. Colliers International
has a highly identified and regarded international brand, global
scale, a broad portfolio of service offerings, and significant
market penetration enabling continued expansion of its platform in
more than 60 countries. As a standalone company, we believe that
Colliers International will be able to:
- Take advantage of internal growth opportunities and industry
consolidation in an industry where brand and global capabilities
are key competitive advantages;
- Create a "pure play" global commercial real estate services
firm that can be easily understood, evaluated, and compared to its
competitors by the capital markets;
- Accelerate acquisition growth and service line diversification
across all geographic regions, while considering merger
opportunities on a larger scale; and
- Better retain and motivate key employees with more attractive
incentives that better align their role and success with the
performance of the business.
FirstService Corporation: The North American Leader in
Residential Real Estate Services
We expect FirstService Corporation will create shareholder value
by maintaining a leadership position in residential property
management services across North America and continuing to provide
property services through a network of well-known and
market-leading franchise brands delivering a consistent and
predictable stream of cash flows with a strong base of contracted
revenue. As a standalone company, we believe FirstService
Corporation will be able to:
- Focus on recurring and repeat property services primarily
targeted at the residential market;
- Benefit from our scale, deep knowledge and expertise, and
access to capital to create value for our clients, reinforce our
service excellence culture and further extend our competitive
advantages;
- Improve margins and operational effectiveness driving
additional value to shareholders;
- Continue and refine its disciplined acquisition growth strategy
utilizing a sharper strategic and capital allocation focused on
opportunities which can provide a material operational and
financial contribution; and
- Generate substantial free cash flow that will allow for
reinvestment in growth opportunities and regular dividends, thereby
providing an attractive total return to shareholders.
Continuity in Leadership
Upon completion of the Arrangement, shareholders are expected to
benefit from the continuity in the quality of management that they
have experienced to date. Jay Hennick, currently Founder and Chief
Executive Officer, will serve both as Executive Chairman of
Colliers International and Chairman of FirstService Corporation
while John Friedrichsen, currently Chief Financial Officer, will
serve as Chief Financial Officer of Colliers International. Doug
Frye, currently Global President & CEO of Colliers
International will retain his current role and leadership of the
executive team in charge of operations as will Dylan Taylor,
currently Global COO of Colliers International. Scott Patterson,
currently COO, will serve as CEO of FirstService Corporation and
Jeremy Rakusin, currently Vice President Strategy & Corporate
Development will serve as Chief Financial Officer of FirstService
Corporation.
Further details concerning the composition of the Boards of
Directors of FirstService Corporation and Colliers International
will be provided at a later date, though it is anticipated that
substantial continuity in the composition of the current Board of
Directors will be maintained.
Financial and Legal Advisors
To advise on the Arrangement, William Blair & Company has
been retained as financial advisor to the Board of Directors of
FirstService, while BMO Capital Markets has been retained as as
Canadian equity capital markets advisor to the Company, PwC as tax
advisor and Fogler, Rubinoff LLP as legal counsel.
Conference Call & Presentation
FirstService will be holding a conference call on Wednesday,
February 11, 2015 at 11:00 a.m. Eastern Time to review the proposed
separation, as well as to discuss its fourth quarter and full year
results for 2014, which were announced in a separate press
release today. FirstService has posted a presentation in the
Investors / Newsroom section of its website that provides an
overview of the separation. The call will be simultaneously web
cast and can be accessed live or after the call at
www.firstservice.com in the Investors / Newsroom section.
About FirstService
FirstService is a global leader in the rapidly growing real
estate services sector, one of the largest markets in the world.
FirstService manages more than 2.5 billion square feet of
residential and commercial properties through its three
industry-leading service platforms: Colliers
International - one of the largest global players in
commercial real estate services; FirstService
Residential - North America's largest manager of
residential communities; and FirstService Brands –
one of North America's largest providers of essential property
services delivered through individually branded franchise systems
and company-owned operations.
FirstService generates more than US$2.7 billion in annual
revenues and has more than 24,000 employees world-wide. With
significant insider ownership and an experienced management team,
FirstService has a long-term track record of creating value and
superior returns for shareholders since becoming a publically
listed company in 1993. The subordinate voting shares of
FirstService trade on the NASDAQ under the symbol "FSRV" and on the
TSX under the symbol "FSV". More information is available at
www.firstservice.com.
Advisory Regarding Forward-Looking
Statements
Information in this press release that is not a historical fact
is "forward-looking information". Words such as "plans", "intends",
"outlook", "expects", "anticipates", "estimates", "believes",
"likely", "should", "could", "will", "may" and similar expressions
are intended to identify statements containing forward-looking
information. Forward-looking information in this press release is
based on current objectives, strategies, expectations and
assumptions which management considers appropriate and reasonable
at the time, including, but not limited to, general economic and
industry growth rates, currency exchange and interest rates,
competitive intensity and shareholder and regulatory approvals.
By its nature, forward-looking information is subject to risks
and uncertainties which may be beyond the ability of FirstService
to control or predict. The actual results, performance or
achievements of Colliers International or FirstService Corporation
could differ materially from those expressed or implied by
forward-looking information. Factors that could cause actual
results, performance, achievements or events to differ from current
expectations include, among others, risks and uncertainties related
to: obtaining approvals, rulings, court orders and consents, or
satisfying other requirements, necessary or desirable to permit or
facilitate completion of the Arrangement (including regulatory and
shareholder approvals); future factors that may arise making it
inadvisable to proceed with, or advisable to delay, all or part of
the Arrangement; the operations and financial condition of Colliers
International and FirstService Corporation as separately traded
public companies, including the reduced industry and geographical
diversification resulting from this separation; the impact of the
Arrangement on the trading prices for, and market for trading in,
the shares of FirstService, Colliers International and FirstService
Corporation; the potential for significant tax liability for a
violation of the tax-deferred spinoff rules; the potential benefits
of the Arrangement; business cycles, including general economic
conditions in the countries in which Colliers International and
FirstService Corporation operate, which will, among other things,
impact demand for services and the cost of providing services; the
ability of each of Colliers International and FirstService
Corporation to implement its business strategy, including their
ability to acquire suitable acquisition candidates on acceptable
terms and successfully integrate newly acquired businesses with its
existing businesses; changes in or the failure to comply with
government regulations; changes in foreign exchange rates;
increased competition; credit of third parties; changes in interest
rates; and the availability of financing. Additional information on
certain of these factors and other risks and uncertainties that
could cause actual results or events to differ from current
expectations can be found in FirstService's Annual Information Form
for the year ended December 31, 2013 under the heading "Risk
Factors" (which factors are adopted herein and a copy of which can
be obtained at www.sedar.com). Certain risks and uncertainties
specific to the proposed Arrangement, Colliers International and
FirstService Corporation will be further described in the
information circular to be mailed in advance of the shareholder
meeting at which the Arrangement will be considered. Other factors,
risks and uncertainties not presently known to FirstService or that
FirstService currently believes are not material could also cause
actual results or events to differ materially from those expressed
or implied by statements containing forward-looking
information.
Readers are cautioned not to place undue reliance on statements
containing forward-looking information that are included in this
press release, which are made as of the date of this press release,
and not to use such information for anything other than their
intended purpose. FirstService disclaims any obligation or
intention to update or revise any forward-looking information,
whether as a result of new information, future events or otherwise,
except as required by applicable law.
CONTACT: COMPANY CONTACTS:
Jay S. Hennick
Founder & CEO
(416) 960-9500
John B. Friedrichsen
Senior Vice President & CFO
(416) 960-9500
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