TORONTO—FirstService Corp. and Colliers International would become two separate companies under a plan announced Tuesday afternoon. Toronto-based FSV said its board has approved in principle a scenario that would spin off Colliers International Group Inc. as a commercial real estate services firm, with FirstService Corp. continuing as a residential property management and services firm under the FirstService Residential and FirstService Brands banners.
Over the past several years, FSV has grown via “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,” says founder and CEO Jay Hennick. He calls the separation of FSV and Colliers “the next bold, but logical, step in unlocking even greater value for FirstService shareholders.”
Both, he adds, would be “billion-dollar companies.” For the year that ended Dec. 31, Colliers, which operates in more than 60 countries, generated pro forma revenue, including contribution from acquisitions completed during the year, of $1.7 billion. FSV's pro forma revenues for the past 12 months totaled $1.1 billion.
The spun-off Colliers—which actually would be the current, publicly traded FSV under a different name—would seek to leverage internal growth opportunities and industry consolidation “in an industry where brand and global capabilities are key competitive advantages,” according to FSV. It would create a pure play global CRE firm, accelerate acquisition growth and service line diversification across all geographic regions and be better able to retain and motivate key employees.
The newly created residential services company, FirstService Corp., would continue focusing on the residential market. It would also maintain 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,” according to FSV.
Hennick will serve both as executive chairman of Colliers International and chairman of FirstService Corp.,while John Friedrichsen, currently FSV's CFO, will serve in the same capacity for Colliers. Both Doug Frye, global president and CEO of Colliers, and Dylan Taylor, the company's global COO, will retain their current roles.
Hennick's successor as CEO of the spun-off FirstService will be Scott Patterson, currently the firm's COO. Friedrichsen's successor as CFO of FirstService will be Jeremy Rakusin, currently VP for strategy and corporate development. FSV management will discuss the separation in more detail during a fourth-quarter investor call scheduled for Wednesday morning at 11.
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