PHH may sell Fantus division Deloitte & Touche identified as prospective buyer

July 09, 1996|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

PHH Corp. is negotiating to sell its Fantus corporate relocation division to Deloitte & Touche LLP, sources said, a unit that has influenced the drag on the Hunt Valley-based company's stock for nearly two years.

The potential sale of the division comes as fewer companies are engaging in the wholesale relocation of operations, turning instead to downsizing and consolidation.

But by acquiring Fantus, one of the nation's premier corporate relocation firms with clients ranging from AT&T Capital Corp. to United Parcel Service, the Atlanta-based Big 6 accounting firm would enhance its professional services at a time when its chief competitors also are becoming more consulting-oriented.

In the past year, Arthur Andersen LLP, KPMG Peat Marwick and Ernst & Young have all beefed up their real estate-oriented consulting practices.

"Accounting firms today are migrating customers away from traditional services toward new, specialized services, and real estate and site selection is no exception," said Barry D. Libert, managing director of Arthur Andersen's real estate transformation consulting group.

"There's more profit potential there, and it allows a lot more follow-on work in regards to technical services, human resources and other areas."

But, while a sale of the Fantus division might help PHH's stalled mid-$50-per-share stock price, it also would appear to contradict the $5 billion company's "total service center" concept by cutting out a key real estate niche.

"Everyone here has concerns and questions, but they aren't really worried," said one Fantus executive, who asked not to be identified.

"We've developed a certain expertise that we feel confident about."

Deloitte & Touche officials referred all inquiries to PHH, but representatives there did not return numerous telephone calls for comment on a pending Fantus sale.

The Fantus division has offices in Hunt Valley; Bethesda; Princeton, N.J.; and Chicago and roughly 50 employees. Deloitte & Touche's corporate relocation arm is also centered in Chicago.

But PHH would not be without relocation services if a sale is completed.

In addition to Fantus, PHH Real Estate Services' umbrella includes individual relocations, asset management and network services, according to PHH's most recent shareholder report.

In all, the Real Estate Services group employs more than 1,600, and PHH's fiscal 1995 reported operating income of $35.2 million on revenues of $687 million.

Fantus is the smallest of the four practice areas, however, and its future opportunities for growth have been steadily shrinking because of general economic trends.

"The relocation business overall has been a drag on their stock for two years now," said Alex Hart, a Ferris, Baker Watts Inc. analyst who follows PHH.

"And that's because corporations aren't moving, they're downsizing, and the volume of PHH Fantus' transactions -- and by extension their revenues -- have gone down. PHH Fantus has done a stellar job, but corporate and government relocation has largely ended."

In the Baltimore area, PHH Fantus assisted in the relocation of AT&T Capital Corp.'s headquarters from New Jersey to Towson and in the Annie E. Casey Foundation's move from Connecticut to downtown.

PHH Fantus also was involved in Care Inc.'s 1992 decision to shift its worldwide headquarters from New York, in which Baltimore was a finalist. Ultimately, the relief organization selected and settled in Atlanta.

Pub Date: 7/09/96

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