Jones Lang deal creates 85 estate agent millionaires

Takeover fever struck the property sector again today as global giant Jones Lang LaSalle's £197 million swoop for rival King Sturge created 85 overnight millionaires at the business.

The combined entity will leapfrog CBRE to become the UK's leading property consultant in a fragmented market considered ripe for further dealmaking as the industry pulls away from recession. Another major property consultant, DTZ, is in talks with French property firm SGP, about a takeover.

JLL will pay £98 million to King Sturge up front with the remainder to come over the next five years. The bulk looks likely to go to equity partners, despite payouts for King Sturge's other staff and costs involved in unwinding the partnership structure.

JLL's UK chief executive Andrew Gould, who will lead the new business, said the two businesses were "highly complementary" with the US-based property giant looking to add King Sturge's strength in residential and industrial property and its presence in the regions to JLL's dominant position in London.

King Sturge's most senior partners will join the UK board of the merged group. Joint senior partner Richard Batten will be executive chairman, and fellow partners Chris Ireland and Mark Stupples will also join the UK board, overseeing capital markets and property management respectively.

Batten, who sees today's deal as vital to support King Sturge's international growth, said more deals in the property sector were likely: "I suspect there will be more consolidation because it is something that does occur coming out of a recession and perhaps the property sector is more fragmented than other professional services lines."

PricewaterhouseCoopers business services partner Simon Hawes said the takeover came as the property world was "awash with rumours" of future tie-ups, and CBRE itself was said to be on the lookout for deals. He said: "The market is increasingly global, with growing polarisation between the global service providers and smaller, regional businesses. Those in the middle ground find themselves in a tough place, lacking the resource and critical mass to compete, but too large to position themselves as niche."

The deal sees 43 King Sturge offices and businesses across Europe, including 24 in the UK, become part of JLL and operate under the name.