CBRE Strikes $800M Cash Deal for Federal Contractor J&J Worldwide Services; Steve Kelley, Sean Thompson Quoted

Dallas-based investment firm CBRE Group has agreed to buy J&J Worldwide Services from Arlington Capital Partners for $800 million in cash as part of efforts to expand its capabilities in the public sector.

The deal is expected to close in the coming months, subject to regulatory approvals and other customary closing conditions, according to a joint release published Monday.

Apart from the initial acquisition price, the transaction includes a potential earnout of up to $250 million, payable in 2027 and subject to J&J meeting certain performance thresholds.

J&J supports U.S. defense and federal civilian agencies through its three business lines: Healthcare and Medical Solutions, Mission Support Solutions and Engineering Solutions. The company has more than 3,300 employees serving more than 250 military installations, hospitals and clinics across the U.S., Europe, the Caribbean, Asia and the Middle East.

J&J CEO Steve Kelley said the transaction will enable the company to continue expanding its platforms in support of military clients at mission-critical facilities worldwide.

“Arlington Capital Partners provided the industry expertise and guidance needed to scale our solutions at an unrivaled pace and prepare us for continued growth. We are excited about combining our capabilities and track record with CBRE’s to enhance our commitment to serving those that serve our nation,” he added.

J&J is expected to continue witnessing low double-digit annual growth in 2024, generating revenue worth more than $525 million and posting earnings before interest, taxes, depreciation and amortization of about $65 million.

“J&J is well-positioned to continue benefitting from strong secular tailwinds, including modernization of US Department of Defense infrastructure, and increasingly as it relates to addressing our near-peer competitors,” said Sean Thompson, chief growth officer of J&J. “Joining CBRE will allow us to build on our record of double-digit annual growth, while positioning J&J to expand our global capabilities to better serve our customers.”

CBRE Chair and CEO Bob Sulentic said the acquisition aligns with the key elements of the firm’s merger and acquisition strategy aimed at strengthening revenue resilience, expanding client base in the government and improving technical services capabilities.

CBRE’s legal advisers in the deal are Simpson Thacher & Bartlett and ArentFox Schiff, while Citi serves as the firm’s financial adviser.

J.P. Morgan Securities acts as financial adviser to J&J. Sheppard Mullin Richter & Hampton advise J&J and Arlington Capital Partners on the transaction’s legal aspect.