Realogy Corp.’s relocation services subsidiary, Cartus Corp., has acquired Memphis-based Primacy Relocation, expanding the company’s global footprint and putting Cartus back in the business of providing relocation services to the government.
Primacy has 700 employees operating in 25 offices worldwide, who managed 51,000 moves and handled $2.88 billion in funds in 2008, according to the company’s Web site. Cartus has 2,500 employees who managed about 135,000 relocations in more than 150 countries for 1,200 clients in 2008.
Terms of the deal were not disclosed. But the acquisition "will significantly expand our global capabilities," said Kevin Kelleher, president and CEO of Cartus, in a press release.
According to The Relocation Intelligencer LLC, a consulting firm for the employee relocation industry, the vast majority of U.S.-based corporations outsource relocations to third-party providers, and Cartus has the biggest slice of that business.
Although there was a trend to bring relocations back in house in 2008, third-party providers still handled 80 percent of moves for US-based corporations that relocate 25 or more employees per year, The Relocation Intelligencer reported in a September, 2008 white paper.
The white paper estimated Cartus’ market share at 32.7 percent of total moves, followed by SIRVA (12.8 percent), Prudential Real Estate and Relocation Services Inc., (9.3 percent), Weichert Relocation Resources Inc. (8.3 percent), Brookfield Global Relocation Services LLC (6.8 percent), Primacy (5.1 percent), Capital Relo (3 percent), Graebel (2.7 percent, Hewitt Mobility (2.3 percent) and Altair (2.3 percent).
More than three dozen other companies, each with less than 1 percent of the market, accounted for 14.7 percent of moves, The Relocation Intelligencer estimated.
Kelleher said Cartus’ acquisition of Primacy will also enable the company to re-enter the U.S. government relocation business, "an area of historical strength" for the company.
According to Realogy’s most recent annual report to investors, Cartus notified the U.S. General Services Administration in March 2008 that it was exercising its right to cancel a contract under which it provided relocation services for government employees "at risk."
Under "at risk" contracts, Cartus receives a fixed fee to provide relocation services, which is used to cover all direct expenses associated with the sale of a home — including acquisition, carrying and selling costs. Under "at risk" contracts, Cartus also bears any loss on the resale of the home.
With home prices falling, Cartus started losing money on the at-risk government contract in 2007, and canceling the agreement "significantly reduced the company’s exposure to the purchase of at-risk homes," Realogy said.
The wind-down of the government at-risk portion of Cartus’ business was "substantially completed" by the end of 2008, and was the main factor in a $51 million drop in revenue from at-risk relocations for the year, the company said in its annual report. …CONTINUED