PHH Group Inc. has agreed to acquire Transamerica Relocation Service Inc. for $50 million in cash and notes, creating one of the nation's largest employe relocation services.

PHH's relocation subsidiary, Homequity Inc., helped corporate clients move about 19,000 employe households last year, PHH President Robert D. Kunisch said yesterday. When corporations transfer employes to new locations, the service offers assistance in selling the employe's old home, finding and financing a new home, packing and moving, and finding new jobs for spouses.

Homequity contributes about 45 percent of PHH's business, Kunisch said. PHH, a management services company based in Hunt Valley, north of Baltimore, earned $36.4 million on sales of $538 million in the year ended April 30. Transamerica and PHH do not disclose sales figures for their relocation subsidiaries.

Transamerica Relocation, a subsidiary of Transamerica Corp. of San Francisco, does about one-third as much business as Homequity and has a "very strong West Coast operation," Kunisch said.

PHH believes the merger will put Homequity slightly ahead of industry leader Merrill Lynch Relocation Management Inc. in the growing area of relocation services.

The total potential market for firms such as Homequity is about 350,000 homes a year, a number that is increasing as small companies grow and as the government begins using such services more, Kunisch said. About 75,000 to 85,000 of those homes were sold by relocation firms last year, a PHH spokesman said.

Merrill Lynch does not release figures on the size of its relocation business, but said its relocation company and Homequity will each serve about one-third of the private-sector market after the merger.

PHH said the merger should be completed in 45 to 60 days.

Kunisch said PHH will announce another acquisition today in a business "allied" with relocation services.