Arthur J. Gallagher & Co has agreed to acquire insurance broker AssuredPartners.
The cost of the mentioned deal is $13.45 billion. This acquisition will be the largest in the history of Arthur J. Gallagher & Co. The company intends to finance the implementation of the specified business agreement through a combination of debt and equity. The firm has announced an $8.5 billion common stock offering to fund the acquisition.
Arthur J. Gallagher & Co is an international insurance brokerage company that also provides risk management services. This firm, founded in 1927, is headquartered in Rolling Meadows, Illinois.
The deal to acquire AssuredPartners is expected to be completed in the first quarter of next year. The relevant information is contained in a statement by Arthur J. Gallagher & Co, which was published on Monday, December 9.
The implementation of the deal will help expand the scale of the Illinois-based company’s activities in the middle-market property and casualty insurance, and employee benefits market in the United States. Also in this case, Arthur J. Gallagher & Co will be able to increase the number of its employees in the United Kingdom and Ireland. Moreover, the deal will help the company expand its offerings into several niche practice groups such as transportation, energy, healthcare, and government contractors.
Chief executive officer J. Patrick Gallagher stated that AssuredPartners’ entrepreneurial spirit, broad footprint in the United States and focus in the mid-market make this brand an ideal merger partner.
Amid news about the deal, the value of Arthur J. Gallagher & Co shares showed virtually no changes in early trading in New York.
Analysts Matthew Palazola and Eric Bedell stated the Illinois-based company is well positioned to integrate AssuredPartners following the $13.45 billion acquisition, given its experience in both large and tuck-in deals. They also noted that the focus of the insurance broker that would be acquired by Arthur J. Gallagher & Co is attractive due to its focus on the middle market, and major players in the relevant industry have targeted this segment. In their opinion, from a financial point of view, the deal appears to have been struck at a lower valuation than Aon’s purchase of NFP. They assume Arthur J. Gallagher & Co estimates 10-12% accretion to trailing EPS.
Currently, brokers based in the United States continue to expand their activities through mergers and acquisitions. Recently, bolder and bigger moves have been observed within the framework of relevant deals. In September, Marsh McLennan agreed to acquire McGriff Insurance Services. The cost of this deal was $7.8 billion in cash, which became Marsh McLennan’s biggest business agreement.
AssuredPartners’ adjusted revenue for the 12-month period ended September 30 was fixed at $2.9 billion. Originally GTCR, a private equity company, owned the mentioned insurance broker from its inception in 2011 until 2015. Nine years ago, AssuredPartners was acquired by another private equity firm Apax Partners.
In 2019, a group of investors led by GTCR agreed to acquire the mentioned insurance broker from Apax Partners, which retained a minority stake.
As we have reported earlier, UniCredit Buys Stake in Commerzbank.
