Buyers Sniffing Around Take-Over of Douglas Elliman

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Buyers Sniffing Around Take-Over of Douglas Elliman

News that Anywhere Real Estate floated an offer to acquire Douglas Elliman sent a signal to other potential buyers to consider the high-end brokerage.

“There’s rumors that the bidding will go higher,” said Steve Murray, an industry advisor on many deals.

Sources told Bloomberg that Elliman was not likely to accept Anywhere’s offer at $4 per share. (Given Anywhere’s cash position, the offer was more likely a combination of cash and equity, activist investor Bradley Tirpak said.)

“If that offer was cash, I think that the board would be forming a special committee,” he said.

“I would expect that the franchise, if they run a process, will garner very, very big interest.”

He added that he’s fielded calls from private equity firms sniffing around. “I think the board will do the right thing,” Tirpak said.

In many ways, the heightened interest makes sense. Elliman — with its relatively cheap valuation compared to a few years ago, limited debt and brand recognition — has long been rumored as an appealing acquisition target for firms frantically trying to keep in the consolidation arms race raging through the industry. It’s hard to gather information about who else might be shopping: One attorney reached by The Real Deal declined to comment because they thought another bidder might retain the firm.

But the firm, which went public in 2021, doesn’t necessarily fit as tidily as other acquisition targets in recent deals, which have expanded buyers’ geographic markets, vertical integration or tech capabilities.

So what exactly would an Elliman buyer be buying? An appealing balance sheet at a relative discount, an organizational culture that has teetered between hard-charging and toxic and a legacy brand that now may represent the last of its kind.

“If you look at the landscape of independent large luxury brokers, who’s left?” asked Finley Hair, director of M&A at Wav Group, a real estate advisory firm.

Rising price tag

Buyers may have missed their opportunity for a true buy-low opportunity with Elliman.

Douglas Elliman (DOUG) shares surged as much as 50% to a two-year high of $3.20 on Friday morning following reports it received a merger offer valuing the firm at nearly twice its market capitalization based on the opening share price of $2.11.

Douglas Elliman, a prominent luxury real estate brokerage, has been the subject of takeover speculation, including a reported offer from Anywhere Real Estate (formerly Realogy). This offer valued Douglas Elliman at over $4 per share. While the deal has been reported in the media, both companies have declined to comment on the rumors