Newmark sells for less than rumored estimate

BGC Partners pays $63M in cash, plus stock
By Adam Pincus | October 20, 2011 04:10PM

Howard Lutnick’s BGC Partners is paying $63 million in cash and $2.3 million in stock for Newmark & Company Real Estate, BGC said in a filing with the Securities and Exchange Commission last week.

BGC could pay an additional 4.83 million shares, which today have a value of $33.38 million, to Newmark shareholders, if certain incentive goals are reached, the company said.

BGC closed Friday on the acquisition of Newmark including the company’s majority interests in 13 affiliated companies around the United States. Newmark, whose partners include CEO Barry Gosin and principal Jeffrey Gural, is known as Newmark Knight Frank in the U.S., and is affiliated with the global brokerage Knight Frank, based in London. BGC announced in April it would buy Newmark. At the time, the purchase price was rumored to be between $125 million and $200 million.

Using the $6.91 share price of the stock at the closing this past Friday, the maximum sale price of the brokerage was $98.7 million. That includes the $63 million in cash plus 339,000 shares of stock, equal to $2.3 million, and the maximum of 4.83 million shares over five years, equal to $33.38 million.

“The former shareholders of Newmark will also be entitled to receive up to an additional approximately 4.83 million shares of stock over a five-year period if Newmark achieves certain enumerated gross revenue targets post-closing,” the release said. BGC will buy the non-controlling interest in the remaining Newmark offices around the country at a later date, the firm said.

BGC, through a spokesperson, declined to comment.

Joseph Harbert, COO of the New York office of global commercial firm Cushman & Wakefield, said he was not familiar enough with the economics of the deal to comment on it, but noted Newmark has flourished in its hometown.

“Newmark has done well in New York,” Harbert said. “Barry [Gosin] has built a good local firm that is very competitive.”